Cryptocurrency exchanges are approaching RBI seeking clarity on status and tax liability

Mumbai: cryptocurrency platforms that have seen a revival in the last two months have sought clarity from Reserve Bank of India (RBI) around their status in India after lack of clear directions continued to curtail their banking options and also created uncertainty on the tax front.

In March, the Supreme Court had issued the RBI’s order banning cryptocurrency in India.

Krypto Exchange have written to the RBI and sought clarity on their status as lenders continue to deny banking services to them due to lack of clear instructions from the regulator.

Cryptocurrency exchanges have also sought directions for their categorization – either a commodity, currency, goods or service – as this will determine how they are taxed under GST framework.

“If the digital assets are not exempt from GST, the digital currency exchanges in India will have a standoff with the tax authority. By early 2019, the tax department had reached several cryptocurrency platforms in this regard. In the wake of the recent Supreme Court ruling, we have also approved the RBI for clarity, as if we are paying GST for the entire transaction, most platforms would not be able to survive, ”said Praveenkumar Vijayakumar, President and CEO, Belfrics Global, a cyrptocurrency platform.

Previously, the indirect tax department had initiated investigations into whether Bitcoins and other cryptocurrencies could be brought under GST.

The indirect tax department had initiated an investigation into Bitcoin exchanges operating in India to ascertain the GST rate that can be charged to them. The sales tax department and the VAT authorities had also launched a tax assessment investigation for Bitcoins a few years back.

The exchanges had even approved the courts in this regard.

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