SSRana Newsletter 2022 Issue 11

May 4, 2022
Cryptocurrency Bitcoin

Cryptocurrency – View of 2022

Cryptocurrency Budget

By Rupin Chopra and Apalka Bareja

The budget for the fiscal year 2022-2023 was presented by the finance minister on 1st February 2022. The Government has put cryptocurrency in a new light with the advent of a new taxation scheme for virtual digital assets. The Central Government has proposed for a 30% tax to be levied on income from the transfer of any virtual digital assets[1] such as cryptocurrencies and non-fungible tokens (NFT’s).

Such a move was inevitable, in light of the much increased usage and proliferation of cryptocurrency and digital assets in India. Considering the ease of access of highly valuable assets like cryptocurrency, such as via apps like CoinDCX, CoinSwitch Kuber, etc., this is a move which was a long time coming.

Reason for such taxation

The Central government has been quite vocal about the use of cryptocurrencies as a medium for monetary exchange. The Indian Government even introduced a draft for a bill known as the ‘Banning of Cryptocurrency & Regulation of Official Digital Currency Bill’ in 2019. But the bill has not yet been passed. India’s Central Bank, The Reserve Bank of India (RBI), in 2018 had imposed a ban on banks to deal in cryptocurrencies but this ban was removed by the Supreme Court in 2020 in the case of “Internet and Mobile Association of India vs. RBI”[2]. Since then, there has been a phenomenal increase in transactions related to virtual digital assets as well in the prices of these assets, along with the recent growing popularity of non-fungible tokens. According to an analysis done in finder crypto report[3] approximately 30% of the adult population in India owns cryptocurrencies. As cryptocurrencies have established a substantial market in India, it was imperative for the Central Government to come up with a taxation scheme for people trading in virtual digital assets.

The Government provided that in order to make it convenient for the authorities to capture the transaction details TDS at the rate of 1% on the transfer of virtual digital assets above a monetary threshold[4]. The finance minister also provided that tax will be levied on the recipient even if virtual digital assets are transferred as a gift.

Cryptocurrencies as an asset and not a currency

The finance minister in a news conference after the parliamentary proceedings had provided that “all except the currency which RBI will be issuing (digital rupee) are considered as assets”[5].

A currency is considered as a legal tender only if they are issued by a central authority (or central bank) and are backed by a sovereign guarantee. This currency is bound to be accepted by the parties as a mode of payment and paves the way for a centralized monetary system.

Cryptocurrencies on the other hand are not yet issued by a central authority and the data for each transaction is available online in public domain. Therefore they pave the way for a more decentralized system where cryptocurrencies are used for payment only if the receiver is willing to accept it. The transaction in the Crypto market or world are dealing with digital assets. Assets are created by individuals and therefore income from virtual digital assets such as cryptocurrency would be termed under assets and be taxed accordingly as due to the rise of digital assets such as cryptocurrencies and NFT’s a substantial amount of people are making profit and there are even people who solely depend on these assets for their income. It would be unfair not to tax people making profit on such transactions.

That said, a decentralized approach to currency is one which is highly debatable, and governments worldwide remain vary of decentralized digital assets and currency.

Implications of such taxation scheme on virtual digital assets

The tax imposed on digital assets such as crypto provides this industry with a sense of legitimacy. The government had been adamant on imposing a ban and various other restrictions on such assets but this taxation scheme could be a step in the right step to provide confidence to the people who are engaged in such transactions along with the fact that the Reserve Bank of India will be issuing its own digital currency in India sometime this year thereby providing clarity on the future of digital currencies and assets in India.

This will ultimately pave way for the mass adoption of such assets in India. The tax levied on virtual digital assets is 30% which is in the bracket of tax on gains from speculative activities such as lotteries, gambling and other gaming activities[6].

Not only is the taxation rate quite high, but pairing or even comparing the cryptocurrencies or NFT’s or any virtual digital assets with speculative assets may not be fair. Crypto is an asset class and the trading or creation of such assets requires certain or specific skills which may not be comparable with activities such as lotteries, gambling, etc.

The guideline proposed for taxation on the gift of virtual digital assets would impact “air dropped[7]” assets which refer to cryptocurrencies which is provided to the investors for free at the time of their launch. Such cryptocurrencies will also be taxed at 30%.

Investors will also not be allowed to set off their losses against any other income and no deductions are allowed with respect to any expenditure or allowance during the transaction of such currencies other than the cost of acquisition[8].

Although the tax imposed on virtual digital assets is one of great need, the taxation scheme introduced may put unnecessary burden on investors, due to the high rate of taxation. As far as income tax filing is concerned, it has been made mandatory to file an income tax return even if person has any tax liability from crypto income even if their income is less than 5 lakhs. These type of may impose unnecessary burden on the assesses as well as the income tax department as according to the report published by finder[9] the major demographic of the Indian population dealing in crypto transactions is between the age of 18-24 years.


The practical implications are yet to be seen, for example, the crypto market could be headed for a big sell off before this fiscal year ends (on 31st March) as the tax schemes proposed are to be levied from next fiscal year. The future of virtual digital assets seems positive and hopeful especially with respect to India and certain regulations when properly drafted by the legislation could provide even for tax concessions and various promotion schemes if in the near future the Government seems as hopeful for the growth and mass adoption of such digital assets as the people. This would require the company keeping in view the security aspect of creating a safe and harmonious channel for people to engage in and own assets in a digital and virtual fo

[1] Budget for the fiscal year 2022-2023 Budget speech

[2] Writ Petition (Civil) No.373 of 2018

[3] Crypto Adoption final

[4] supra note 1

[5] Budget 2022 rbi can issue digital currency all else including crypto are assets finance minister nirmala sitharaman to ndtv on 30 tax on digital asset

[6] Income Tax Act, 1961

[7] Airdrop cryptocurrency

[8] supra note 1

[9] supra note 3

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The Fight Against Frivolous FIRs and its Remedies

digital crimes

By Nihit Nagpal and Anuj Jhawar

First Information Report

FIR is the First Information Report given to a police officer in charge by any aggrieved person relating to the commission of any offence. Though FIR as a term is not defined in the Code of Criminal Procedure, 1973 (hereinafter referred to as “CrPC”) but, Section 154 of the CrPC[1] relates to FIR as “information in cognizable cases”.

Registration of FIR

FIR given to a police officer is registered under Section 154 (1) of the CrPC[2] which states that any information relating to the commission of a cognizable offence, if given orally to the police officer, shall be reduced to writing and if given in writing shall be signed by the person giving it.

However, if the officer in charge of a police refuses to record such information, the aggrieved person may approach the Superintendent of Police under Section 154 (3) of the CrPC[3] who, if satisfied that such information relates to commission of a cognizable offence, either investigate the case himself or direct an investigation to be made by any police officer.

Further, if the Superintendent of Police fails to investigate, the aggrieved person may approach the Magistrate under Section 156 (3) of the CrPC[4] who may order a police officer to investigate a cognizable offence.

Quashing of FIR

There have been numerous instances where frivolous FIRs have been filed against persons solely to harass them at the hands of law. However, the Hon’ble High Courts in India under Section 482 of the CrPC[5] can exercise their inherent powers to prevent abuse of the process of law to secure the ends of justice. Although, a petition can be filed under Section 482 of the CrPC for quashing of the FIR, the Hon’ble High Courts can invoke their powers under Article 226 of the Constitution of India[6] if the Hon’ble High Court is convinced that the power of investigation has been malafidely exercised by a police officer, and in such case the Hon’ble High Court can issue a writ of mandamus restraining the police officer from misusing his legal powers, thus quash the FIR.

Difference between Section 482 of the CrPC and Article 226 of the Constitution of India

Section 482 of the CrPC Article 226 of the Constitution of India
An application under Section 482 of the Cr.P.C. in the High Court for quashing the First Information Report can be filed only after the charge-sheet has been filed. A petition under Article 226 of the Constitution alone can be filed in the High Court for quashing the First Information Report before filing of the charge-sheet.


Revision in Criminal Case

Section 397 of the CrPC[7] deals with the powers of revision. This provision gives the High Courts or the Sessions Courts jurisdiction to consider the correctness, legality or propriety of any finding inter se an order and as to the regularity of the proceedings of any inferior court. The Supreme Court of India in Prabhu Chawla v. State of Rajasthan[8] clarified that remedy available under Section 397 of CrPC for revision, does not bar the accused to approach the High Court under Section 482 of CrPC for quashing of the FIR.

Guidelines to be followed by Courts while exercising inherent powers to quash the FIR

The Supreme Court of India in State of Haryana v. Bhajan Lal[9] held that the Hon’ble High Court can quash the FIR to protect the accused from malicious prosecution.. The Apex Court issued seven guidelines which should be followed by the Court while exercising its inherent powers to quash the FIR under Section 482 CrPC. Those seven guidelines are as follows:

  1. Where allegations made in the FIR does not prima-facie constitute any offence against the accused.
  2. Where allegations in the FIR do not disclose a cognizable offence against the accused.
  3. Where allegations made in the FIR and the evidence collected in support of the FIR does not disclose the commission of any offence against the accused.
  4. Where allegations in the FIR do not constitute a cognizable offence but constitute only a non-cognizable offence, no investigation is permitted by a police officer without an order of a Magistrate.
  5. Where allegations made in the FIR are so absurd and inherently improbable on basis of which no prudent person can reach a just conclusion that there is sufficient ground for proceeding against the accused.
  6. Where there is an express legal bar provided in the CrPC to the institution and continuance of proceedings and where there is a specific provision in the CrPC or the concerned Act, providing redressal for the grievance of the aggrieved party.
  7. Where a criminal proceeding is manifestly attended with mala fide and where proceeding is maliciously instituted with an ulterior motive for wreaking vengeance on the accused and with a view to harass due to a private and personal grudge.


Thus, a frivolous FIR filed against a person to harass them at the hands of law can be challenged by filing a petition at the Hon’ble High Court under Section 482 of the CrPC read with Article 226 of the Constitution of India and the High Court while following the guidelines as laid down by the Hon’ble Supreme Court of India in State of Haryana v. Bhajan Lal can exercise its inherent powers to quash the FIR to protect the person from malicious prosecution.

Karanveer Singh, Associate at S.S. Rana & Co. has assisted in the research of this article.

[1] 154 of CrPC. Information in cognizable cases.

[2] 154 (1) of CrPC. Information of a cognizable offence, given to an officer in charge of a police station.

[3] 154 (3) of CrPC. Information of a cognizable offence, given to Superintendent of Police.

[4] 156 (3) of CrPC. Magistrate may order Police Officer to investigate a cognizable offence.

[5] 482 of CrPC. Saving of inherent powers of High Court.

[6] 226 of Constitution of India. Power of High Courts to issue certain writs.

[7] 397 of CrPC. Calling for records to exercise powers of revision.

[8] MANU/SC/0979/2016

[9] MANU/SC/0115/1992

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Gaining through the Gaming: Things to be kept in mind

ASCI - Online Gaming

With a rise in the accessibility of smart phones and a piercing rate of internet usage among the populace in India, there has been a substantial boom in the online gaming wherein people put up money expecting for possible case or cash-equivalent winnings in return in India.

ASCI Guidelines on Online Gaming

A rapid increase in the online gaming apps and sharp rise in the consumer interests in such games has resulted in the ASCI – Advertising Standard Council of India, to step up and issue more comprehensive guidelines in addition to the already existing guidelines regulating advertising surrounding the online gaming apps . Established in 1985, the ASCI is committed to carry out the Self- regulation of Advertising in order to ensure the protection of the customer interests.
The ASCI has proposed guidelines on online gaming (effective from 15th December, 2020) to guide the advertisers so that the advertisements do not violate the ASCI Code pertaining to misleading advertisements and are not harmful to the society or individuals as such online games contain an element of financial risk and can be addictive in nature.
The guidelines are as follows:-

1. No gaming advertisement may depict any person under the age of 18 years, or who appears to be under the age of 18, engages in playing a game of ONLINE GAMING FOR REAL MONEY WINNINGS, or suggest that such person can play these games.
2. Every such gaming advertisement must carry the following disclaimer-

a) Print/ static: This game involves an element of financial risk and may be addictive. Please play responsibly and at your own risk.
i. Such a disclaimer should occupy no less than 20% of the space in the advertisement
ii. It should also SPECIFICALLY meet disclaimer guidelines 4 (i) (ii) (iv) and (viii)laid out in the ASCI Code
b) Audio/video: “This game involves an element of financial risk and may be addictive. Please play responsibly and at your own risk.”
i. Such a disclaimer must be placed in normal speaking pace at the end of the advertisement.
ii. It must be in the same language as the advertisement.
iii. For audio-visual mediums, the disclaimer needs to be both in audio and visual formats.
3. The advertisements should not present ‘Online gaming for real money winnings’ as an income opportunity or as an alternative employment option.
4. The advertisement should not suggest that a person engaged in gaming activity is in any way more successful as compared to others.
Taking into consideration that a large number of advertisements are appearing on television and other forms of media, the Ministry of Information & Broadcasting has issued an advisory that all broadcasters are advised to comply with the ASCI guidelines and the advertisements broadcasted on television adhere to the aforementioned ASCI guidelines.
Recently during the 15th season of the Indian Premier League, which started on March 26, 2022 high decibel advertising from online gaming industry was witnessed. The ASCI expressed concerns about several advertisements potentially violating its guidelines.
Around 300 advertisements aired by fantasy gaming companies during the first week of the IPL tournament were found to be violative of the guidelines issued by the ASCI. Online gaming companies failed to display disclaimers in their advertisements or out across misleading content which did not exhibit the element of financial risk involved in playing such fantasy sports. This was across OTT platforms and Television.
The issues/ misleading content displayed in some of the advertisements included:
• Dubious claims such as “India’s biggest 1st prize”.
• Disclaimer informing the customers of the financial risks was flashed quickly and not at the normal speaking pace as mentioned in the guidelines.
• While the disclaimers were being shown and spoken, there were celebrities acting at the same time distracting the customers from important information about the element of financial risk.
• Disclaimers displayed in smaller space than what has been prescribed as per the guidelines
ASCI is concerned that despite clear guidelines some online gaming companies are adopting to a shortcut.
The whole idea behind the making of these guidelines for advertisements is to guide the advertisers and help them identify potential risks relating to the content of the advertisements and the customers about the risks involved in playing such online games. In conclusion, the online gaming companies must adhere to the guidelines issued by ASCI in order to ensure that the advertisements properly display and mention all kinds of risks involved in the accessing of such online games and remain legal, honest, harmless and truthful. The advertisers by following the ASCI guidelines can make the advertisements more transparent and safe to maintain and enhance the confidence of public in advertising.

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Applicability of GST on the Traders, Exporters and Importers- India

GST man

What is GST?

GST refers to the Goods and Service Tax which is a common tax levied on goods and services sold for domestic consumption in India. The tax is remitted to the government by the businesses selling the goods and services which they in turn charge from the consumers as the tax is included in the final price of the goods and services that is being provided to them. Demand for the goods and services can be fulfilled through different mechanisms either through local or interstate supply or by export or import for that matter. Taxes are levied accordingly according to the type of sale.

Applicability on traders

Tax levied on goods and services manufactured and sold within the territories of India is governed by the Central Goods and Services Tax[1], 2017.

Traders refers to an individual who is engaged in the activity of buying and selling of goods. For the purposes of this section, we will deal with traders dealing with the procurement or supply of goods and services within the territory of India as imports and exports are dealt with down below.

All traders are required to register under the GST act,

  • if they are engaged in intra-state supplies or
  • their turnover is above twenty lakhs or
  • are not dealing with exempted goods as mentioned under the GST act such as fruits, cereals, or food that has not been put into branded containers, etc.

A trader dealing with goods and services in local limits will not be required to register under GST.

Input Tax Credit

In simple terms, input tax credit means that at the time of paying the tax on the final output, a trader can reduce the amount of tax that he has already paid on inputs of such goods and services. Goods and service tax has brought under one umbrella the indirect taxation system that was prevalent in India before its implementation and various taxes had to be at different stages. Some of the taxes under that regime were credible and traders were not able to claim credit for taxes such as CST or entry tax. But under GST the traders can claim input tax credit on most purchases and inputs.

For example – a manufacturer or a trader has paid Rs. 200 as tax on inputs and the tax levied on the final goods or services is Rs. 300 then the trader can claim the input credit and he will only be liable to pay the remaining Rs. 100.

Certain supplies are not eligible for input tax credit such as motor vehicles which are used for transportation of people or vessels and aircraft, services of general insurance, etc but there are certain situations or exemption these cases as well in which scenario input tax credit can be claimed.

GST Composition scheme can be claimed by a trader

A trader with a turnover which is less than Rs. 75 Lakhs can avail the benefits under the GST composition scheme. This scheme acts as an alternative to the conventional method of levying GST to the small tax payers as they can pay GST at a fixed rate of turnover every quarter under this scheme. It provides a simple and reduced cost of compliance to the small traders. People availing the benefits under this scheme are not eligible to claim Input Tax Credit.

The rate for traders under this scheme is 1% of the turnover – [0.5% CGST and 0.5% SGST]

People not eligible under this scheme

  • Supplier of exempted goods
  • Supplier of services (except restaurants not serving alcohol)
  • Person engaged in inter-state supply of goods.
  • A supplier making any supply of goods through an electronic operator (e-commerce).

 Reverse Charge Mechanism

Under reverse charge mechanism, the liability to pay the GST is on the recipient of the goods and services and not on the supplier. This is mostly applicable to imports but there are other notified products under the tax will be paid under the reverse mechanism scheme. These products include supplies such as certain agriculture products like cashew nuts, silk yarn, raw cotton, or legal services, used vehicles, or if the trader is located in a non-taxable territory and the services are supplied by him to any person other than non-taxable online recipient, etc.

Payment of Tax

A trader registered under GST is liable to deposit their taxes on a monthly basis on or before the 20th of the succeeding month of liability.

A trader who is availing the benefits under the GST composition scheme is liable to pay taxes on a quarterly bases, on or before 18th of the month succeeding the quarter relating to supplies.

Invoice created by traders

The invoice created by traders must be in accordance with the GST invoice format[2] rules. In GST invoices, HSN code must be mentioned along with various other information like invoice number, invoice date, etc., The following is the criteria for mentioning HSN code on GST invoices.

  • Taxpayers whose turnover is below 1.5 crores need not mention HSN code in their invoices.
  • Taxpayers whose turnover is above 1.5 crores, but less than 5 crores shall use a two-digit code.
  • Taxpayers whose turnover is above 5 crores shall use a four-digit code.

Applicability on Exporters

Exports are governed by the Integrated Goods and Services Act, 2017[3]. Export from India refers to the trading or supplying of goods and services outside the domestic territory of India.

Every exporter must have an IEC code which refers to the Importer Exporter Code in which the Pan card of the Exporter will be authorised to be used as an IEC[4].

Export means supply of any service when[5];

  • the supplier of the service is located in India;
  • the recipient of the service is located outside India;
  • the place of supply of service is outside India;
  • the payment for such service has been received by the supplier of service in convertible foreign exchange; or in Indian rupees wherever permitted by RBI, and
  • the supplier of service and the recipient of service are not merely establishments of a distinct person. if place of supply is out of India

No GST is levied on the export of any kind of goods and services. Therefore, exporters don’t have to pay any tax or any kind of GST on the goods and services exported by them.

Export is treated in one of two ways

  • inter-state supply under the IGST Act
  • as zero-rated supply under Section 16(1) of the IGST Act

Zero Rated Supply of goods and services

“Zero rated supply”[6] means any of the following supplies of goods or services or both, namely:

  • Export of goods or services or both; or
  • Supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone

It does not mean that the exporter does not have to pay any tax but that the person exporting such goods and services or both will be entitled to claim refund of the GST paid by him as per Section 54[7], under one of two conditions

  • If the goods and services or both have been exported under bond or letter of undertaking (LUT) without paying any integrated Tax and therefore the exporter can claim refund of the unutilised input credit.
  • If the exporter has supplied the goods and services after fulfilling certain conditions, safeguards and procedures as may be prescribed and has paid the Integrated goods and service tax, then in this case the exporter can claim refund of the tax paid by him on the supplied goods or services or both.

Procedure for claiming refund by the Exporter

Application for refund of IGST paid has to be made under Section 54[8] of the IGST Act by the exporter in the prescribed format.

An exporter has to file a shipping bill for the goods that are being exported. This shipping bill is treated as a “deemed application” for the refund of tax that is already paid by the exporter along with the export manifest or reports mentioning the number and date of the shipping bills.

Documents required for claiming refund

  • Copy of return evidencing payment of duty
  • Copy of Invoice
  • Document proving that the burden of paying the tax has not been passed on by the exporter (CA certification or even a self-certification)
  • Any other document as required

Deemed exports

Sometimes the goods supplied do not leave the country (in present case India) and the payment for such supplies manufactured in India is received in either Indian rupees or in convertible foreign exchange, therefore the Government may notify the supplies of these products as deemed exports.

Some supplies that have been notified as deemed export by the Government[9] include:

  • Supply of goods by a registered person against Advance Authorization
  • Supply of capital goods by a registered person against Export Promotion Capital Goods Authorization
  • Supply of goods by a registered person to Export Oriented Unit
  • Supply of gold by a bank or Public Sector Undertaking against Advance Authorization as per the Custom law applicable.

The returns which are filed under GST for the deemed exports are done is as same as the general procedures provided for any other type of export under GST.

Applicability on Importers

Imports refer to goods and services, or both supplied from any other place outside the domestic territory of India into the territory of India in the course of Inter-state trade or commerce. Therefore, import of goods or services is treated as deemed inter-State supplies and exporters are liable to pay Integrated Tax (IGST). Tax would be levied on the import of services under the IGST Act, whereas on import of goods taxes would be levied under the Customs Act, 1962 read along with the Custom Tariff Act[10], 1975.

Imports are subjected to tax as the consumption of such goods and services occurs in India.

Reverse Charge Mechanism

In case of imports into the territory of India the tax will have to be paid on a reverse charge basis. The liability to pay the tax is on the importer (recipient of supply of such goods and services instead of the supplier)

Every importer must also have an IEC Code. The importer is required to declare the GSTIN number as registered under GST[11].

Levying of taxes on imports

The taxes are levied on the assessable value of the goods and services plus the basic customs duty levied under the Act along with the education cess. The compensation cess is calculated on the amount before the addition of the integrated tax which is same as the amount on which the integrated tax was calculated.

Particulars Duty
(A) Assessable Value Rs. 100/-
(B) Basic Customs Duty@10% Rs.10/-
(C) Education Cess @3% Rs.0.30
(D) Value for Integrated Tax Rs.110.30
(E) Integrated Tax @18% Rs.19.85
(F) Value for Compensation Cess Rs.110.30
(G) Compensation Cess @ 15% Rs. 16.55
(H) Total Duty (B+C +E+G) Rs.46.70


Goods imported by a unit or a developer in the Special Economic Zone for authorised operations are exempted from the whole of integrated tax[13].

Input Tax Credit

In terms of Import the definition of input tax also includes integrated tax and compensation cess. Therefore, the importer can claim the input tax credit of the integrated tax and compensation cess paid by him at the time of import which can be utilised by him for payment of taxes on his outwards supplies. The basic customs duty and education cess are not available as input tax credit[14].


The GST regime has unified the tax structure and made the taxation schemes more efficient and simpler for the people to follow as well as making it easy for the government as well to keep track and levy taxes. Various types of concessions and privileges are provided under GST specially to exporter and the whole process has been made more effective as compared to the previously prevailing indirect tax regime. These are the GST provisions and implications that the trader, exporter and importers in India are subjected to.

[1] CGST Act, 2017, CGST act

[2] gst invoice format rules

[3] IGST Act, 2017 IGST act

[4] Import in GST Regime, Imports in GST Regime

[5] Integrated Goods and Services Act, §2(6), 2017

[6] Integrated Goods and Services Act, §16(1), 2017

[7] Integrated Goods and Services Act, §54, 2017

[8] IGST, supra note 7

[9] Notification no. 48/2017 – Central Tax cbec notifies supplies deemed exports cgst act 2017

[10] cs import rule12

[11] Import in GST Regime, supra note 4

[12] Import in GST Regime, supra note 4

[13] The Customs Tariff Act, §3(7), 1975 (vide Notification No. 64/2017-Customs dated 05.07.2017)

[14] Import in GST Regime, supra note 4

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