The Indian government is planning to implement new laws in the country for regulating cryptocurrencies. The planning committee is mulling over different laws including payments for overseas exchanges. The indirect tax committee is thinking about implementing the Goods and Service Tax (GST) for overseas exchanges. The tax value for exchanges overseas will be 18% over transactions with the citizens of India.
The 18% tax value will be applied to industrial entities and capital goods. The highest value of GST tax decided is 28% which will be applied to luxury goods such as cars and other automobiles. This value of the tax is the same that is charged to brokerage firms that trade on the stock market with conventional shares.
At the moment, the Indian cryptocurrency exchanges already charge the Goods and Service tax to their users. The 18% tax is integrated into the trading fee that the users have to pay when purchasing Bitcoin, Ethereum, and other crypto-assets. The tax is added to the buying price of cryptocurrencies.
Exchange firms are required to pay the Goods and Service (GST) tax to the government along with the general tax payments that they have to make.
According to the Economic Times (ET), crypto exchange platforms in India are not paying these taxes at the moment. The Indian government can use the Online Information Database Access and Retrieval (OIDAR) services to categories Indian users of overseas exchanges. This can help them bring the curtailing Indian crypto exchanges under the tax umbrella.
According to the OIDAR, every exchange that provides service to people living in India should be taxed. Tax is important to the government as it helps in leveling the playing field. It will not be fair for overseas exchanges to pay more tax than the local ones. The implementation of this tax rule will make sure that such unfairness does not continue.
The sudden interest in regulating cryptocurrencies and securing tax payments came from the blooming prices of crypto assets during the pandemic. At the moment, none of the heavyweight government sectors of India have any regulatory hold over cryptocurrencies. So, in case a scam occurs, the relevant authorities will not be able to do anything about it.