2% Levy could be Imposed on Cryptocurrencies Bought through Exchanges Operating in Abroad

It has been a couple of years since the cryptocurrency community and the regulatory authorities are having a go at each other. On one side, the cryptocurrency industry is constantly growing in India, but on the other, the Reserve Bank of India (RBI) is trying to shut them down entirely.

It was just the beginning of 2021 when the Reserve Bank of India had launched a new attack on the cryptocurrency industry. The RBI had submitted a proposal at the Indian Parliament for the banning of cryptocurrencies.

The RBI even proposed that it was already working on the central bank digital currency and if allowed, it was going to proceed with the development of the digital INR.

Therefore, another battleground was opened between the two entities and the crypto-community even criticized the way of conduct demonstrated by the RBI.

However, the government of India went ahead and cleared out that there was not going to be a full ban on cryptocurrencies. Finally, the cryptocurrency community and industry had a breather in India for the first time in several years.

Many are speculating that the reason behind the government going easy on cryptocurrencies is the promising nature of cryptocurrencies. Over the years, the cryptocurrency industry has proven to be extremely beneficial for the entire world.

With the passage of time, people are becoming used to the digital mode of payments. This is the reason why the cryptocurrency industry is gaining constant growth and adoption all over the world.

The countries that have already adopted cryptocurrencies have started benefiting from the technology. These countries are also observing a boost and growth in terms of revenues and economy.

Even at the beginning of 2020, the Indian taxation department had made an estimate in regards to the revenues it could generate from cryptocurrencies. At that time, it was estimated that the government of India could generate $990 million in revenues from taxation on cryptocurrencies.

As the country has now decided to let cryptocurrencies being offered in India, it is now considering the option of applying a 2% equalization levy on cryptocurrencies.

The reports suggest that the country is aiming to do this on cryptocurrencies that the Indian crypto-users purchase from exchanges that are off-shore.

According to local sources, the Indian Government’s 2% “equalization levy” could be extended to crypto-assets purchased from off-shore exchanges.

It was back in 2016 when the government of India had introduced the equalization levy for the first time. At that time, the government had imposed a tariff on payments that were related to non-resident companies and e-commerce platforms and their services.

At that time, the levy imposed on the said services was 6%, which has been brought down to 2% in order to boost crypto-digital adoption in the country.