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Impact of GST on Bitcoin or Cryptocurrency

Let we see how the traders of cryptocurrency should liable to pay GST on exchange of Cryptocurrency in India

Case 1: Treating Bitcoin or Cryptocurrency as a Goods

Definition of Goods and Services under GST Act’ 2017

Definition of Goods – Section 2(52) of GST Act’ 2017

Goods’’ means every kind of movable property other than money and securities but includes actionable claims, 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.

Macro view of gold and silver color shiny coins with Bitcoin symbol

Goods include:

  • Every kind of movable property.
  • Actionable claims.
  • 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.

 A goods does not include:

  • Money and
  • Securities

Where definition of money includes:

Meaning of term “Money” as defined in Section 2(75) of CGST Act’ 2017  “money means Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognized by the Reserve Bank of India when used as consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value.

Meaning of term “Securities” as defined in Section 2(90) “securities” shall have meaning assigned to it in sub-section (h) of section 2 of the Securities Contracts (Regulation) Act, 1956 (42 of 1956)”Goods must be moveable To be classified as Goods under GST Act.

Securities: “securities” include

(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; 9

(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;] 12(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;

Conclusion :

It concludes that Bitcoin or cryptocurrency is not a money as per the definition of GST and nor a securities. As it is movable in nature and falling under the definition of goods, based on that GST should levied on the entire transaction value as per time and value of supply.

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May 2024