Is LUT applicable for payment received in cryptocurrency?

As per my understanding, cryptocurrency is not acceptable for claiming the same as export of service. Hence, it will be liable to GST

- You are liable to pay GST@18% on export of services. Cryptocurrency is not a foreign currency therefore benefit of LUT is not applicable

- Income tax would be payable on the services provided to foreign clients, sale of cryptocurrency) and any other income. Gain on cryptocurrency is taxable at a rate of 30%. 

While calculating income from sale of cryptocurrency, below are the important points for consideration

- No deduction in respect of any expenditure (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed to the assessee under any provision of Income Tax Act in computing the income from sale of VDA  (Virtual Digital Asset)

- No set off of loss from transfer of the virtual digital asset shall be allowed against income computed under any provision of Income Tax  Act to the assessee and such loss shall not be allowed to be carried forward to succeeding assessment years.

- The word "transfer" as defined in clause (47) of section 2, shall apply to any virtual digital asset, whether capital asset or not.

For detailed discussion you may opt a phone consultation

Dear Sir,

Hope you are doing well.

No, LUT is not applicable for payment received in cryptocurrency as Cryptocurrency is not treated as foreign currency.

No bcz consideration in USD is received against sale of crypto and not against supply of services 

LUT can only be made applicable as of now if you receive money now in convertible foreign exchange.

Although you can fight that you had received it in foreign currency but it would be difficult further Indian government don't consider crypto as currency also accepting money in crypto would lead to 30% flat tax on income.

You can may be get a company registered outside India get payment there if amount is huge and then get money in India.

Hope you find the information helpful, if yes do rate if 5 and provide your valuable feedback for my improvement.

Thank you.

The LUT cannot be obtained and 18% GST needs to be paid on amount received in cryptos. Cryptos are not considered as currency. Also, receiving amount in cryptos is violation under FEMA as well.

Hello,

Based on the information provided, 

1. GST on cryptocurrency services: As cryptocurrency is not considered a foreign currency, the benefit of an LUT (Letter of Undertaking) not be applicable. You will be liable to pay GST at a rate of 18%.

2. Taxation of cryptocurrency income: Income from the sale of cryptocurrency is taxable at a rate of 30%. No deductions for expenditure or allowances are allowed, and losses from the transfer of cryptocurrency cannot be set off against other income or carried forward to future years.

3. Consideration for large amounts: If the amount is substantial, you may explore the option of registering a company outside of India to receive payments there and then transfer the funds to India.

4. If you convert your cryptocurrency to USD and receive it in your bank account, it would not fall under the purview of the Letter of Undertaking (LUT) for the purpose of GST. The LUT is typically applicable for export of services and is associated with receiving consideration in convertible foreign exchange against the supply of services. 

Hope you find the information helpful. You are free to contact me for further discussion.If you could spare two minutes of your time to write a review, It would be really grateful and very happy to read it.

Thank you.

Shubham Goyal

Please note that your transaction have multiple leg in terms of indian taxation

1. You are receiving funds in the form of crypto and not convertible foreign exchange and hence its not export of service and service you providing is subject to GST at full rate without any application of LUT

2. The crypto you are selling in indian local market through trader is sale of crypto currency which is again subject to GST, however rates are yet not defined on it. But under recommendation they are suggestion GST @28% so whenever notified that liability will hit and as of now it is having exposure of 18% of GST

3. You can share me total income you are receiving yearly based on than i can suggest a structure of set up a company overseas and take funds in crypto there legally convert and than transfer to India to avoid any litigation and tax implication in future