CBIC Seeks Details On Digital Assets From Top Crypto Exchanges

The Central Board of Indirect Taxes and Customs (CBIC) has asked major crypto exchanges to share details about the types of digital coins and tokens being traded on their platforms. 

It has also asked for other details such as the valuation of coins and tokens and how they are divisible, Business Standard reported.

“We had meetings with crypto exchanges on wide-ranging issues relating to the asset class. We have sought a detailed report on different crypto products being traded and their respective transaction fees and how they are getting calculated,” a senior official was quoted as saying in the report.

The CBIC is reportedly also mapping out taxability of crypto transactions as it wants to bring crypto assets under the umbrella of goods and services tax (GST). It is also working on the definition and classification of the crypto asset class.

With a fair idea on the value of these digital products and method of transactions, it would be easy to determine how it could fit into the GST regime, as well as the applicable tax rate, the official added.

The crypto exchanges have been given time till the end this month to share the details.

Currently, 18% GST is levied on services provided by crypto exchanges, which are categorised as financial services.

 From April 1 this year, the Indian government introduced tax at the rate of 30% on income from transfer of digital assets, including cryptocurrencies. Later on July 1, 1% tax deducted at source (TDS) for crypto transactions came into effect. 

Both the tax regimes impacted the trading volume of crypto exchanges, causing up to 70% decline for some of the exchanges.

Besides, global economic slowdown and negative user sentiment have also affected crypto exchanges globally and in India. Many Indian crypto exchanges have also come under the radar of the Enforcement Directorate (ED) for money laundering and have seen the agency carrying out search operations and funds seizure over the last few months. 

Meanwhile, the Reserve Bank of India (RBI) continues to oppose cryptocurrencies. In a concept note on central bank digital currency (CBDC), the RBI reiterated its stance that cryptocurrencies undermine India’s financial and macroeconomic stability. 

“These digital assets (cryptocurrencies) undermine India’s financial and macroeconomic stability because of their negative consequences for the financial sector…Further, a wider proliferation of cryptocurrencies has the potential to diminish monetary authorities’ potential to determine and regulate monetary policy and the monetary system of the country which could pose (a) serious challenge to the stability of the financial system of the country,” the RBI said.