Understanding Cryptocurrency HSN Code and GST Rate in India
As cryptocurrency adoption grows in India, businesses and investors must navigate the evolving tax landscape. A critical aspect of compliance is understanding the HSN code for cryptocurrency and the applicable GST rate. This guide explains how crypto transactions are classified and taxed under India’s Goods and Services Tax (GST) framework.
What Is the HSN Code for Cryptocurrency?
The Harmonized System of Nomenclature (HSN) code categorizes goods and services for taxation. In India, cryptocurrency transactions fall under HSN 9983, which covers “financial and related services.” This includes:
- Crypto trading and exchange services
- Mining operations
- Wallet and custody services
- Initial Coin Offerings (ICOs)
Using the correct HSN code ensures accurate GST filings and minimizes legal risks.
GST Rate Applicable to Cryptocurrency Services
India imposes an 18% GST rate on cryptocurrency-related services, including:
- Exchange/platform fees
- Transaction charges
- Commission for crypto advisory services
Note: Buying cryptocurrency (e.g., purchasing Bitcoin) is not subject to GST. However, selling crypto for INR or using it for taxable goods/services may attract GST or income tax (TDS under Section 194S).
Compliance Requirements for Crypto Businesses
To adhere to GST rules:
- Register for GST if annual turnover exceeds ₹20 lakh (₹10 lakh for northeastern states).
- Mention HSN 9983 on invoices for crypto services.
- File monthly/quarterly GST returns (GSTR-3B, GSTR-1).
- Maintain records of transactions for 6 years.
Challenges in Crypto Taxation
- Regulatory ambiguity: Lack of clear guidelines for decentralized finance (DeFi) or NFTs.
- Valuation: Determining the taxable value of volatile crypto assets.
- Cross-border transactions: Managing GST on international crypto trades.
FAQs: Cryptocurrency HSN Code and GST Rate
1. What is the HSN code for Bitcoin transactions?
All cryptocurrencies, including Bitcoin, fall under HSN 9983 for GST purposes.
2. Is there GST on purchasing cryptocurrency?
No. GST applies only to service fees, not the crypto asset itself.
3. What are the penalties for non-compliance?
Fines up to 100% of the tax due or imprisonment for deliberate evasion.
4. How is the taxable value calculated?
GST applies to service charges (e.g., 2% trading fee on a ₹1 lakh transaction = ₹360 GST).
Conclusion: Proper application of the cryptocurrency HSN code and 18% GST rate is essential for legal compliance. Consult a tax professional to address complex scenarios and stay updated on regulatory changes.
