Payments made with crypto currencies may be subject to the GST.

As a result, tax advisors are scrambling to answer questions from individuals who have provided services outside of India and have been paid in crypto currencies (GST). Many people have claimed that they were paid in cryptocurrency after completing work for clients in the United States or Singapore, such as graphic design or advisory.

The question is whether this is a supply of services or an export, and what the applicable GST is.

After the government announced this year that crypto assets would be taxed, many people have revealed their cryptocurrency income and claimed that this was compensation for work they had done during the year..

A new complication has arisen in the form of the GST, according to tax experts, despite the fact that the direct tax rules are simple and 30 percent tax will be applied to these.

On these transactions, it’s still not clear how much GST is due, or even if these transactions can be deemed above board at all.

Assuming that the Indian exporter receives consideration in the form of cryptocurrencies, this would have a direct impact on the Indian exporter’s profit margins. ” “It will be interesting to see how RBI guidelines clarify the issue of receiving money in Indian rupee as being equivalent to foreign exchange,” says Abhishek A Rastogi, partner at law firm Khaitan and Co.

Consider the case of a New Delhi resident who went to his tax advisor and claimed that he provided graphic design services to a Singapore-based company that was in need of them.

He asserted that the company had paid a total of Rs 75 lakh in cryptocurrencies for various projects over the course of the year.

There is now a conundrum for the tax experts.

If there’s no supply of services, there’s no way to know what GST rate to apply. According to Gaurav Mehta, the founder of Catax, a cryptocurrency tax consultancy firm, “Secondly, all cryptocurrency transactions between such taxpayers and the companies that are paying have to be cross-verified to ensure that this is not a conduit for anything that is disallowed under the Indian legal system.”

According to insiders who spoke to ET, the government may be looking to clarify the GST applicable to these transactions.

Two weeks ago, some senior government officials sought advice from well-known cryptocurrency tax advisors in this regard.

In February, the minister of finance enacted a 30% tax on digital currency profits.

Taxes on digital assets have also been implemented by the government at 1%. To be clear, in the budget guidelines the government did not use the term “cryptocurrency,” but rather “virtual digital assets.”

According to a new government statement, profit and loss on crypto currency assets will be prohibited.

Because of the new tax on crypto currencies and other digital assets, which was announced on Tuesday, investors may find themselves in even more difficulty, as ET reported on February 3 when it first learned of the development.
So, here’s the dilemma: What taxes would be levied if an investor profited Rs 1 lakh from Bitcoin trading but lost Rs 1 lakh from Ethereum trading?

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