India to reduce GST paid on cryptocurrency exchanges from 18% to 1% through regulatory reclassification

India to reduce GST paid on cryptocurrency exchanges from 18% to 1% through regulatory reclassification

According According to a report by CNBC TV18 India, the nation’s government plans to reclassify cryptocurrency exchanges as e-commerce platforms, which will reduce the goods and services taxes (GST) that users must pay per transaction or per trade to 1%. .

Currently, the government of India charges a GST of 18% on transactions made on registered cryptocurrency exchanges, which is passed on to users as trading fees. The process is similar to the fiscal protocol of Indian brokerages.

However, depending on the legal address of the exchange, the new GST proposal could result in more tax obligations for certain users. In July, Business Insider India reported that the government can require foreign cryptocurrency exchanges to charge the same 18% GST as domestic equivalents to their clients when conducting business with Indian citizens. Overseas cryptocurrency exchanges are generally exempt from GST registration in India, resulting in a considerable tax gap between users of different exchanges.

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Indian lawmakers remain highly divided over building a regulatory framework for cryptocurrencies in the country. Proposed legislation ranges from classify cryptocurrencies as commodities to totally ban digital asset trading. Last year, the Supreme Court of India overturned the ban by the Reserve Bank of India, which prohibited banks from conducting business with cryptocurrency companies. Meanwhile, Prime Minister Narendra Modi has publicly endorsed blockchain technology, but has also fallen victim to a crypto scam on Twitter.