GST treatment on amount collected through ICO (Initial Coin Offering)

[Ashiesh Prremji]

Dear Experts,

Please suggest if an Indian Company is collecting money through ICO for it's own developed Crypto currencies. Is there any GST implication on the money collected from Investors ?

Thank You,

[Shilpi Jain]

A very vague position regarding the legal framework of cryptocurrency in India. Thereby not much clarity on taxation under gst. However this should not be liable to gst.

[SOWMYA CA]

Though I second Shilpi mam in regards to the legal framework for cryptocurrencies in India. It is worthwhile to go through the definition of Services under section 2(102) of the CGST Act, 2017 which states - “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged; Therefore, it could considered as a supply of service liable to GST.

[Shilpi Jain]

On analysing cryptocurrencies, it is possible to fit it under goods. May not be required to go to the services definition.

[Shilpi Jain]

As regards fitting this under "....but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;..."

considering the lack of legal framework in India regarding cryptocurrencies (CC), it may be difficult to fit it under this phrase. This is because CC no where near to fit into the definition of money.

[Ashiesh Prremji]

Thanks to both of You for Valuable Reply !

AI Summary

GST on ICO proceeds uncertain: regulatory ambiguity produces competing views on supply characterization and taxable treatment. Whether receipts from an initial coin offering (ICO) attract GST hinges on the characterisation of crypto tokens and regulatory uncertainty. Contributors advance three positions: no GST due to legal vagueness; GST as a service under the inclusive definition covering money conversion; or GST as arising from treatment of tokens as goods. Difficulties arise in fitting ICO proceeds into the clause on use or conversion of money because cryptocurrencies are not currently treated as money, leaving GST applicability unresolved without clearer statutory guidance.