Indian companies dealing in crypto or NFTs already know their income-tax position: gains on virtual digital assets (VDAs) are taxed flat at 30% under Section 115BBH of the Income Tax Act, with 1% TDS under Section 194S. That regime is settled law. GST is a different story. There is no dedicated GST rate or HSN/SAC entry for crypto assets or NFTs, and the government has repeatedly told Parliament that VDAs remain unregulated even as enforcement action continues. That gap between "taxed" and "regulated," and between income tax and GST, is where most commercial risk sits.
This matters practically. If a platform cannot say with confidence whether GST applies to the full transaction value or only to its fee, it cannot price, invoice, or size its tax exposure correctly. Getting this wrong has already cost exchanges money: the Finance Ministry told Parliament that GST evasion of roughly ₹824 crore had been detected across exchanges including Binance's Indian entity, WazirX, CoinDCX and CoinSwitch Kuber, with only a fraction recovered. An authority raising a demand, or an exchange following a certain practice, does not mean the underlying question is legally settled — it means the question is being contested in real time.
What is comparatively clear
GST applies to any supply of goods or services made in the course or furtherance of business, under Section 7 of the CGST Act. Where a crypto exchange, wallet provider, or NFT marketplace charges a separately identified fee — a trading commission, withdrawal fee, listing fee, custody charge, or subscription — that fee is a service fee, and current practice taxes it at 18%. This is generally traced to the residuary services entry (Entry 35, "other services not elsewhere classified") under Notification No. 11/2017-Central Tax (Rate), rather than to any provision written specifically for crypto.
This distinction matters: the fee for the service is on firmer ground than the value of the asset itself. A platform's commission is conceptually separable from whatever crypto or NFT changes hands in the trade. Simply holding a digital asset is not a supply at all — GST is a transaction tax, and holding, without more, is not a transaction.
What remains unclear about crypto transactions
Beyond service fees, several core questions have no binding, notified answer:
1. Classification. Section 2(52) of the CGST Act defines "goods" as movable property other than money and securities; Section 2(102) defines "services" as anything other than goods, money and securities. Whether a crypto asset is goods, a service, money, a security, or something else has not been settled by notification or statute. Tax commentary and some enforcement practice treat crypto as an intangible good (sometimes referenced loosely against HSN 960899, "other miscellaneous articles"), but this is industry practice and departmental positions, not a government-notified classification.
2. Taxable value. If a transaction is taxable, is GST due on the gross value transacted, on the commission or spread only, or on some other measure? Current enforcement generally targets the fee, but if crypto is ultimately classified as goods, a stronger argument exists for taxing the full transaction value — which would be commercially significant and is not resolved.
3. Crypto-to-crypto swaps and crypto as payment. Using one token to buy another, or accepting crypto as consideration for goods or services, raises valuation and double-supply questions that have not been addressed by rule or circular. Each leg of such a transaction may, in principle, be a separate supply.
4. Non-monetary and volatile consideration. Where consideration is paid in crypto rather than rupees, valuation rules under the CGST Rules (open market value, or cost-plus where no comparable exists) apply in principle, but their application to a fast-moving crypto price has not been tested through binding guidance.
5. Staking, mining and rewards. Whether these are a supply at all, and if so what the value and timing of supply is, remains unaddressed. Businesses running or facilitating such programmes should treat this as an open question rather than assume exemption.
It is inaccurate to say all crypto transactions attract 18% GST, and equally inaccurate to say GST applies only to exchange fees. Both statements describe common practice for part of the market, not a complete or binding rule.
Why NFTs require a separate analysis
An NFT is a token; what it represents varies enormously, and that underlying right — not the NFT wrapper — should drive the GST analysis. An NFT might evidence ownership of digital artwork, a licence to use content, a membership or access right, or a claim on a physical asset. These have different classification, valuation and place-of-supply consequences, so treating "NFTs" as one category is a mistake.
On primary sales, a creator or platform minting and selling an NFT is likely making a taxable supply; the open question is whether it is goods or services. Tax commentary offers both views — supply of goods under a residuary entry, or a service under the general "other services" heading — with both landing at 18% by default. The rate may converge, but classification still affects place of supply, input tax credit eligibility and compliance mechanics, so it is not immaterial. Secondary sales and marketplace/creator royalties raise further questions: whether the marketplace acts as agent or principal, and whether royalties are a separate, ongoing supply. None of this has binding, NFT-specific guidance yet.
Cross-border transactions and operational compliance
Where a platform is based outside India and Indian users are the recipients, GST analysis turns on place-of-supply rules. Many exchange and platform services can fall within the framework for Online Information and Database Access or Retrieval (OIDAR) services under Section 13(12) of the IGST Act, where the place of supply is the recipient's location. Under that framework, if the Indian recipient is a GST-registered business, liability typically shifts to that recipient under reverse charge; if the recipient is an individual (a "non-taxable online recipient"), the offshore supplier is generally expected to register and charge GST directly. This is a real and increasingly enforced compliance track, but not every offshore platform service or NFT transaction automatically qualifies as OIDAR — that depends on the facts of the service.
On domestic compliance: registration thresholds, invoicing (including for fee income versus pass-through crypto value), and input tax credit eligibility on platform costs should all be reviewed with the same fee-versus-asset distinction in mind. Records should distinguish INR-equivalent values at the time of each transaction, since valuation disputes are easier to defend with contemporaneous records than reconstructed ones.
A note on advance rulings: an Authority for Advance Ruling decision, even a favourable one on crypto or NFT classification, binds only the applicant and the jurisdictional officer for that specific fact pattern. It is persuasive, not precedent, and can be reached differently by another AAR on similar facts.
What companies should do now
· Map each transaction type (trading fee, custody, staking, NFT mint, royalty, cross-border service) separately rather than applying one blanket GST treatment.
· Document the classification and valuation position taken for each type, with reasoning, so it can be defended if questioned later.
· Keep fee income and underlying asset value visibly separate in invoices and books.
· Preserve INR-equivalent valuation records at the time of each transaction.
· Review GST and indemnity clauses in customer and vendor contracts before scaling volumes.
· Get specific advice before launching a new token, staking, or NFT royalty model — do not assume an existing product's treatment carries over.
Fathom Legal advises crypto platforms and businesses launching token or NFT products on transaction structuring, contract drafting and regulatory risk assessment, helping clients take documented, defensible positions in an area where the law itself is still developing.