India seeks to implement additional 18% tax on foreign crypto exchanges
The Indian government could require foreign crypto exchanges to pay an additional 18% tax on transactions with Indian citizens.
According to a Economic Times report, the Indian government is considering the idea of adding additional tax requirements to all foreign crypto exchanges operating in the country. The Department of Indirect Taxes examines whether, under current law, stock exchanges are required to pay the Goods and Services Tax (GST).
If the authorities believe that the exchanges provide certain data services that fall under their jurisdiction, the 18% tax will come into effect for these operations. As long as local cryptocurrency exchanges come on, the 18% tax is already built into the trading fees that are paid by clients.
The stock exchanges then pay the GST to the government as part of their annual tax payments. This is similar to how brokerage houses charge for trading on the stock exchange, even up to the 18% tax rate. On a related note, officials have also considered charging 2% on transactions with foreign crypto exchanges.
India is leveling the playing field
India said the proposed tax would be rolled out to “level the playing field” between local and foreign investors. This means that some crypto users in India pay more tax than others and officials want to level things up. If they can pocket a few extra dollars in the process, so be it. While foreign exchanges currently avoiding these taxes, the Indian government has a plan to bring them back under the jurisdiction of their tax bubble.
Official plans to reclassify foreign crypto exchanges as Online Information Database (OIDAR) valuation and recovery services. OIDAR Services are digital or data services provided to Indian citizens or residents living in India. Indian law states that any such service should be taxed whether or not there is a physical exchange. Therefore, providers of such services outside the reach of Indian tax laws may still be required to pay GST.
According to government literature“Foreign providers of these services would receive an unfair tax advantage if the services they provide were excluded from the tax net. The statement went on to say that the only condition for the law to come into force is that the consumer is in India.