Everyone is aware of GST and ambiguities created by it. A layman or a professional no one is left untouched by its impact, not even our economy and business. I am quite sure that everyone is aware of bitcoins and its ever fluctuating valuations, everyone is talking about applicability of income tax on its buying/selling but has anyone thought of applicability of GST on its buying/selling?

So let’s start with the definitions under The Central Goods and Services Tax Act, 2017 (hereinafter referred to as Act):

As per Section 2(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.

As per Section 2(102) “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.

The word which should be emphasized here is securities, it is neither covered by the definition of goods nor services, hence not leviable to GST. Further as per Section 2(101) of the Act “securities” shall have the same meaning as assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; definition of Securities as per Section 2(h) Securities Contracts (Regulation) Act, 1956 is reproduced hereinafter

 It includes:

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;

[(ia) derivative;

(ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;]

[(ic) security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;]

(id) units or any other such instrument issued to the investors under any mutual fund scheme.]

1[Explanation.—For the removal of doubts, it is hereby declared that “securities” shall not include any unit linked insurance policy or scrips or any such instrument or unit, by whatever name called, which provides a combined benefit risk on the life of the persons and investment by such persons and issued by an insurer referred to in clause (9) of section 2 of the Insurance Act, 1938 (4 of 1938);]

[(ie) any certificate or instrument (by whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable, including mortgage debt, as the case may be;]

(ii) Government securities;

(iia) such other instruments as may be declared by the Central Government to be securities; and

(iii) rights or interest in securities;

As evident from above Bitcoins cannot be referred to as securities. Furthermore, as per Section 3(36) of the General Clauses Act 1897 “Movable property” shall mean property of every description, except immovable property; thereby the definition of goods cover bitcoins into its ambit. Somehow, which is not possible, keeping in mind the above stated definition, if we conclude that bitcoins are not goods then the extensive definition of Service (supra) would encompass bitcoins.

Therefore, considering the law in force buying/selling of bitcoins are leviable to GST.

Disclaimer: The entire contents of this article are solely for information purpose and have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. It doesn’t constitute professional advice or a formal recommendation. The author has undertaken utmost care to disseminate the true and correct view and doesn’t accept liability for any errors or omissions. You are kindly requested to verify & confirm the updates from the genuine sources before acting on any of the information’s provided hereinabove.

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Location: Chandigarh, IN
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4 responses to “Bitcoin and GST”

  1. Akash says:

    Great article. Quiet enlightening

  2. JAYANT SHAH says:

    In your article, you proved that Bitcoin is neither goods nor services nor securities ,then why concluded that it is liable to GST. The reasoning of the same is appropriately required

    • CA Ankit Sethi says:

      Sir,
      The extract of last para of article is reiterated as under:
      “…thereby the definition of goods cover bitcoins into its ambit. Somehow, which is not possible, keeping in mind the above stated definition, if we conclude that bitcoins are not goods then the extensive definition of Service (supra) would encompass bitcoins.”
      As per this, Bitcoins are covered by definition of Goods but if somehow we say Bitcoins are not goods then it will we covered by the definition of Services.
      Either way it is leviable to GST.

  3. AVINASH says:

    Innovative article
    Highly appreciated

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