The Indian government could require overseas crypto exchanges to pay an additional 18% tax on transactions with Indian citizens.
According to a report by the Economic Times, the Indian government is considering adding additional tax requirements to all overseas crypto exchanges operating within the country. The indirect tax department checks whether exchanges are required to pay goods and services taxes (GST) under applicable law.
If officials believe exchanges may offer certain data services that are their jurisdiction, the 18% tax on those operations will come into effect. As for local cryptocurrency exchanges, the 18% tax is already included in the trading fees paid by customers.
The exchanges then pay the GST as part of their annual tax payments to the government. This is similar to brokers for trading on the stock exchange, even up to a tax rate of 18%. Similarly, officials have also considered charging 2% for transactions with foreign crypto exchanges.
India levels the playing field
India says the proposed tax would be introduced to “level the playing field” between local and overseas investors. That means some crypto users in India are paying more taxes than others and officials want to make things up. If they can pocket a few extra dollars in the process, so be it. While Forex is currently avoiding these taxes, the Indian government has plans to bring them under the jurisdiction of its tax bubble.
Official plans to recategorize overseas crypto exchanges as Online Information Database Assess and Retrieval Services (OIDAR). OIDAR services are any digital or data service provided to Indian citizens or residents of India. Indian law dictates that such services should be taxed whether or not it is a physical exchange. Ergo, providers of such services that are outside the reach of Indian tax laws may still be hooked for GST payments.
According to government literature, “the foreign providers of such services would receive an unfair tax advantage if the services they provided were removed from the tax network.” The only requirement for the law to come into force is that the consumer be resident in India.
Disclaimer of liability
All information contained on our website is published to the best of our knowledge and belief and only for general information purposes. All actions of the reader in relation to the information on our website are entirely at your own risk.