The GST regime has entered the fifth year of its evolution. This process has been dynamic with the tax framework strengthening in compliance, evolving to solve post-birth bottlenecks, and understanding how it can further assimilate 'supplies' to widen its scope and reach. 

One of the areas of evolution is the ability to assimilate and capture new businesses, which may have been earlier outside the ambit of taxation. 

With respect to expanding frontiers, GST laws are now looking at two emerging sectors to widen its base and integrate within its boundaries. 

To illustrate, last year, significant debate happened on (i) whether prize money pool collected in 'fantasy games' can be subject to tax and (ii) transaction by cryptocurrency bourses that can be brought into the GST fold. 

In the case of 'fantasy games', while the platforms hosting such games pay GST on the 'platform fees' charged; money collected to form a 'prize pool' are not subject to GST, on the grounds that they are akin to 'actionable claims' for 'games of skill' and hence outside the purview of GST laws. 

GST laws only allow taxability of 'actionable claim(s)' related to lottery, betting, gambling [where the prize is won due to 'chance']. The above view has been reinforced by positive judgments, among others, from the Bombay High Court [Gurdeep Singh Sacchar -2019 (pending in Supreme Court)] and Rajasthan High Court [Ravinder Singh Choudhury -2020 (appeal dismissed by Supreme Court)]. 

The government in an attempt to provide clarity and to analyse/evaluate the taxability of online gaming portals in India had constituted a Committee of Ministers at the beginning of June 2021, to provide a report within six months. 

The terms of business for the committee consisted of an evaluation of services by online gaming portals from a GST perspective, and evaluation of the judicial landscape in this respect, to see if changes in the law were required basis the rulings. 

However, the report of the committee has still not been tabled and hence, not been deliberated by the GST Council. 

Given that fantasy gaming has emerged as a key sector [especially during the lockdown period] and there is no firm conclusion even today, on the taxation of its various mechanics, the committee report is expected to show the way forward in the evolution of the GST law, particularly whether money in 'prize pool(s)' can be bought under the ambit of tax, in any form. 

The second emerging sector has been the evolution of cryptocurrency bourses in India. Much of the activities related to cryptocurrency are still being understood, as mechanics are hyper-technical and often greyed from interpretation. 

India has a complicated relationship with cryptocurrency considering there is no definite law to regulate the same and the Reserve Bank views them tentatively and prefers to keep them at arms-length [albeit after prodding from the Supreme Court]. 

Cryptocurrency bourses today pay GST on the commission charged from buyers in Indian Rupees while not paying GST on any commission charged from buyers who use a crypto coin for payment. 

The opinion is that the commission charged in crypto should also be subject to GST, by using appropriate valuation principles, and bourses taxed to the same. 

The view held is that crypto payment is just another way to pay valuable consideration, for the supply of service. The unchallenged recovery of differential demands in cash from various bourses on this aspect, in late December 2021, is also the marker thrown by the revenue in the matter. 

Interestingly, the crypto bourses also seem to have accepted this view, with most of them coughing the differential demand at the insistence of the revenue authorities. 

There are other areas of crypto transactions that need further determination. Internationally, tax jurisdictions have been evolving laws to capture aspects of cryptocurrency transactions in daily business. 

For example, in the United Kingdom or in Australia, while the supply of token itself is not charged to value-added tax, receipt of cryptocurrency as payment, for sales of goods and services, are proposed to be taxed to VAT [the value being the pound sterling value/AUS $ value of the exchange token at the point of transaction]. 

Indian GST laws also need to evolve and frame guidelines to capture such transactions, as the world is slowly moving towards digital and decentralised payments, and loopholes in regulation could lead to significant revenue leakage. 

The emerging viewpoint remains that this is a ripe sector to be brought into the ambit of GST and further enhance revenue accumulation. 

In summary, the evolution of business demands a symbiotic evolution of taxes. If regulation fails to keep up, then the inevitable leakage creeps into the system. 

However, such evolution must be scientific, supported by legal principle and immune from judicial challenge. If these primaries are met, new revenue accumulation becomes a significant enabler of the growing taxation opportunities. We look forward to the financial budget in 2022 for answers to the same.