India Proposes Reduction on GST Paid On Crypto Exchanges
The nation of India has reportedly revealed plans to reduce the Goods and Services Tax users pay on crypto Exchanges. Currently, India levies an 18% Goods and Services Tax per transaction initiated on registered crypto exchanges, which the exchanges pass to the users as trading fees.
Reports have it that the country hopes to reduce the GST through reclassification from 18% to 1% per trade. However, the new proposal could lead to additional tax liabilities depending on the where the exchange is domiciled in.
India May Ask Foreign Exchanges to Charge 18%
Back in July, it was reported that India could ask foreign exchanges to charge the same 18% GST to their customers as their domestic businesses when conducting businesses with Indians. However, crypto exchanges based overseas are exempted from GST. This resulted in a gap in tax payment between users of various exchanges.
While the topic of GST remains debatable, another issue is brewing in the Indian parliament concerning the creation of a regulatory framework for digital assets in the country. In late October, the parliament proposed classifying virtual currencies as commodities. The Finance Ministry said the proposed regulatory framework would treat digital assets as commodities rather than currencies.
However, if cryptos are labeled as assets under the new proposed legislation, there will be tax implications for investors and exchanges. As of the time of the proposal, the Indian Tax Department was looking at ways it could tax crypto earnings, but no decision was made.
Blanket Banning of Crypto Trading
The Indian government once considered the option of placing a ban on the trading of cryptocurrencies in June. The lawmakers were reported to be looking into some modalities for regulating virtual assets in the country. Bloomberg indicated that the government was in talks with regulators and stakeholders in the industry to analyze the provisions of the proposal.
Till date, no formal steps have been taken by the government regarding banning crypto trading after several reports emerged of a possible ban. However, it’s believed that the authorities are looking for a better approach to regulate the industry, and that might be the reason for the delayed ban.
India’s central bank still maintains its stance on regulating the crypto industry after revealing its reservations about the novel industry to the government earlier. However, the central bank clarified that commercial banks could still conduct crypto services. This came after the Supreme Court overturned RBI’s appeal to prohibit banks from rendering crypto services.
Despite the widespread calls for regulating the industry, India’s PM Narendra Modi, is backing blockchain technology. Although the PM has been a victim of a crypto Twitter hack, the PM believes that there are several opportunities in blockchain and could make the country a haven to technological investments.
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