According to a CNBC TV18 India story, the local government plans to reclassify cryptocurrency exchanges as e-commerce platforms, This will reduce the taxes on goods and services (GST) that users must pay per transaction, or per trade, to 1%.
Currently, The Indian government applies a GST of 18% to transactions made on registered cryptocurrency exchanges, which is passed on to users in the form of trading fees. The process is similar to the fiscal protocol of the country’s stock brokers.
However, depending on the exchange’s legal address, the new GST proposal could result in more tax obligations for certain users. In July, Business Insider India reported that the government could ask foreign crypto exchanges to charge their clients the same 18% GST as domestic equivalents when doing business with Indian nationals. Foreign cryptocurrency exchanges are often exempt from GST registration in India, resulting in a considerable tax gap between users of the various exchanges.
Indian lawmakers remain highly divided on creating a regulatory framework for cryptocurrencies in the country. The legislative proposals range from classifying cryptocurrencies as commodities to a total ban on trading digital assets. Last year, the Supreme Court of India struck down the Reserve Bank of India’s ban on banks from doing business with cryptocurrency companies. For his part, Indian Prime Minister Narendra Modi has publicly supported blockchain technology, but a year earlier he was the victim of a scam to steal cryptocurrencies via Twitter.
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