CRYPTO CURRENCY / VIRTUAL DIGITAL ASSETS: INDIRECT TAX CHALLENGES AND THE NEED FOR CLARITY
AUTHOR – SHRIRANG SHRIPAD KASHYAP, LLM STUDENT (SAVITRIBAI PHULE PUNE UNIVERSITY)
BEST CITATION – SHRIRANG SHRIPAD KASHYAP, CRYPTO CURRENCY / VIRTUAL DIGITAL ASSETS: INDIRECT TAX CHALLENGES AND THE NEED FOR CLARITY, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (1) OF 2026, PG. 31-36, APIS – 3920 – 0001 & ISSN – 2583-2344.
Abstract
The rapid emergence of crypto currencies and other Virtual Digital Assets (VDAs) has fundamentally altered traditional concepts of money, property, and economic exchange. While India has taken significant steps toward regulating VDAs through the Income Tax Act, 1961, particularly by introducing Section 115BBH and Section 194S, the indirect tax treatment of crypto currencies remains ambiguous and fragmented. The Goods and Services Tax (GST) framework, which governs indirect taxation in India, was not originally designed to accommodate decentralised digital assets operating without intermediaries or clear territorial presence. As a result, several interpretational challenges arise concerning the classification of crypt currencies, determination of taxable events, valuation, place of supply, and the identity of the taxable person.
This paper critically examines the indirect tax implications of crypto currency transactions under the Indian GST regime. It analyses whether crypt currencies should be treated as goods, services, securities, or actionable claims, and evaluates the consequences of each classification. The study further explores GST liability in activities such as crypto trading, mining, staking, exchange services, and cross-border transactions. By drawing comparisons with international approaches adopted by jurisdictions such as the European Union, Australia, and Singapore, the paper highlights the regulatory gaps in India’s indirect tax framework.
The paper argues that the absence of explicit legislative guidance has resulted in uncertainty for taxpayers, enforcement challenges for tax authorities, and increased litigation risk. It emphasises the urgent need for a clear, comprehensive, and technology-neutral indirect tax policy that balances revenue considerations with innovation and compliance ease. The study concludes with recommendations for statutory clarification, administrative guidelines, and harmonisation between direct and indirect tax regimes to ensure certainty, transparency, and sustainable growth of the digital economy in India.
Keywords: Crypto currency, Virtual Digital Assets, GST, Indirect Taxation, Digital Economy, Tax Classification, India