pri Taxability of Bitcoin in GST Taxability of Bitcoin in GST

CA Dilip Jain

CA Dilip Jain

Introduction: There is a always a currency in a Country which is approved by Government. It is declared as Legal Tender. It can be traded or used for purchase of asset. Bitcoin is a crypto currency and worldwide payment system. Bitcoin is a digital Currency which is neither approved by any Government and Central Bank. This Currency was Invented by Satoshi Nakamoto in 2009. In India Till Now Government has not declared Bitcoin as a Legal or Illegal Currency. It is Very Much Volatile.

Their can be 2 cases in which it can be taxed in GST:

1. IF BITCOIN IS DECLARED AS LEGAL CURRENCY: If Bitcoin is declared as Legal Currency then we will not be required to pay GST on Sale and Purchase of Bitcoin Currency. Because as Per Section 2(52) of CGST Act, Goods means every kind of movable Property other than Money and Securities. So Bitcoin will not fall in Goods definition. Thereby, we will not be required to pay GST On Sale and Purchase of Bitcoin Currency. But the agency which is providing services of sales and purchase of Bitcoin Currency, will be required to Charge GST on Service Charges Only.

2. IF BITCOIN IS NOT DECLARED AS LEGAL CURRENCY:  We will be required to pay GST on Sale and Purchase of Bitcoin. For Tax ability of this, there is also a Specific Valuation Rules, As per Rule 32 of CGST Rules, Where the Reserve Bank of India reference rate for a currency is not available, the Value Shall be 1 Percent of the gross amount of Indian Rupees  provided or received by the Person Changing the Money. So, In case of Bitcoin Currency, Value of Supply of Services Shall be 1 Percent.

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July 2021