After introducing direct tax regime for virtual digital assets, the government is weighing the applicability of the goods and services tax (GST) on the mining of cryptocurrency, reported Hindu Business Line.
'Mining' refers to the creation of cryptocurrency or validating a transaction of cryptocurrency between the buyer and the seller, according to the Subhash Garg Committee that had proposed a set of specific actions to be taken for virtual currencies in 2019. The major issue in levying GST on cryptocurrency mining is whether to treat the mining as goods or service.
Also Read: Cryptocurrency Prices Today: Bitcoin, Ethereum, Cardano rise while Solana dips marginally
''First, a call is to be taken as whether to treat mining as goods or service and then place it accordingly in a category from the GST point of view'', a government official told Hindu Business Line.
Moneycontrol could not independently verify the report.
However, crypto experts are of the view that mining is an extremely challenging activity in India. Mining is low in India and tracking the miner and taxing them is difficult as they are located outside the country. Also, whether the exchange will be liable to pay GST in case the miner is not located in India, remains to be answered.
According to Kawal Prakash Singh, Head of Quant with crypto platform CoinDCX, miners provide a service of verifying and processing the transaction usually by solving a cryptographic puzzle. The service is rewarded in terms of the token - depending upon the token that is mined. The reward for the miner should be treated as a service fee and may be considered as GST, he added.
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