Back in March, the Supreme Court of India delivered a historical judgment against banking bans imposed by the Reserve Bank of India (RBI)’ against the crypto service provider.
This offered a much-needed lease of life to the uncertain crypto community and also helped in reviving many crypto exchanges and service providers who had to abruptly shut their operation after RBI released a circular back in April 2018, prohibiting any bank from offering their service to them.
However, there are still no regulations around the crypto space in the country, and thus these crypto service providers are still uncertain about the taxation process and how the government is going to tax their business.
The absence of clear guidelines has led to several banks still refusing to offer their service despite the judgment from the supreme court.
Now, these crypto platforms have collectively written a letter to the RBI seeking clarity from the central bank over their regulatory status in the financial ecosystem, reported ET.
The Details of the Letter
The letter was a request for clarity over their legal status and whether they fall under the category of commodity, currency, goods, or a service, as this would determine how these platforms are taxed under the Goods and Services Tax (GST) framework.
Praveenkumar Vijayakumar, Chairman & CEO Belfrics Global commented on the dilemma saying:
“If the digital assets are not exempted from GST, the digital currency exchanges in India are going to have a standoff with the tax authority. In early 2019, the tax department had reached out to several cryptocurrency platforms in this regard.
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.”
These concerns sound legitimate since in the past the indirect tax department has initiated an investigation into Bitcoin and other altcoins to determine whether these digital assets could be brought under the GST.
Apart from that the department also launched an investigation towards different crypto exchanges to determine which bracket of GST rate can be levied on these exchanges.
A recent RTI filed by Naimish Sanghvi of CoinCrunch seeking a response on whether the regulators are working on any form of regulatory framework or policy for digital assets and whether the RBI has notified the banks about the lifting of the ban on virtual currencies.
The RBI responded to the query suggesting that under the sections of 2(f) of the RTI act these queries did not qualify as a piece of information.