Cryptocurrency exchanges write to RBI to seek clarity on status, GST

Cryptocurrency exchanges have asked the Reserve Bank of India (RBI) for clarity on their legal status and taxability.

The platforms wrote to the central bank after lenders had refused services to them amid unclear instructions, according to a report by The Economic Times.

The Supreme Court, in March, quashed the RBI's order that prohibited entities under its purview from dealing in cryptocurrencies or providing related services.

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Cryptocurrency exchanges have also asked about their classification - commodity, currency, goods or a service - which will determine their taxability under the goods and services tax (GST) system, ET reported.

Praveenkumar Vijayakumar, the chairman of cryptocurrency platform - Belfrics Global, told the paper that there would be a stand-off with tax authorities if digital assets were not exempt from GST.

"In the wake of the recent Supreme Court ruling, we have also approached the RBI for clarity on this, as if we pay GST on the whole transaction, then most platforms would not be able to survive," Vijayakumar said.

The indirect tax department previously conducted an investigation into whether Bitcoin and other digital currencies can be brought under the GST system.