Apart from the already heavily weighted tax regime on cryptos, the Government of India is considering imposing a “reverse charge” on virtual digital asset investments made through foreign platforms.
A reverse charge is a tax owed by the recipient of goods or services rather than the supplier. The burden of goods and services taxation (GST) would rest on an Indian investor who purchases services from a domestically unregistered crypto exchange.
A source, speaking to Business Today TV, said,
“If a crypto exchange is based out of India, and is not impacted by GST implication, then the receiver who is based out of India will be liable to pay GST on a reverse charge basis.”
According to reports, depending on commissions gained from crypto transactions, the percentage of this reverse charge may be up to 18%.
Business Today TV’s source further added,
“The legality of virtual digital assets could be considered under schedule 2 of The Central Goods and Services Act, 2017 which mentions of the activities or transactions to be treated as supply of goods or supply of services.”
While the judgment is expected this month at the GST council, investors have already been paying 30% tax on cryptocurrency earnings since April 1.
Many of India’s major crypto exchanges, like WazirX, have moved out of the nation, preferring to move to crypto-friendly territories such as Dubai. Coinbase, one of the largest and most popular exchanges in the world, steered away from India, citing informal pressure from the country’s central bank.
The authorities slapped a 30% tax on returns generated by trading virtual digital assets. The one percent TDS requirement went into effect in April of this year. India recorded a massive 70% drop in crypto investors when the new tax system was announced.
However, blockchain technology is something that the Indian government is highly interested in. Many Indian states have already begun using blockchain tech to keep record of lands. India’s education board, CBSE, has also announced plans to move their content to a blockchain.