Overseas cryptocurrency exchanges with a customer base in India may have to pay additional tax of 18% in the form of Goods and Services Tax (GST). All their services are covered under OIDAR rules.
In India, almost all foreign exchange transactions involving Indians don’t pay any tax to Indian authorities. However, Indian tax authorities are looking into whether they need to charge GST. These charges could mount up to 18% for overseas exchanges.
According to Indian tax laws, almost all transactions that involve Indians consuming goods and services invite GST charges. Overseas exchanges may be subject to GST given that they are providing certain “Data” services, according to some experts, The Economics Times reported.
The government could categorize services provided by overseas exchanges that allow Indians to trade on their platform as (OIDAR) services. The online information database access and retrieval (OIDAR) rules state any digital/data service provided to Indians or people based in India should be taxed.
Moreover, almost all cryptocurrency exchanges based in India pay 18% GST. It is based on the margin or commission or trading fee they charge.
There is no clarity on whether cryptocurrency is an asset, security, or currency, said EY India tax partner Abhishek Jain. Experts pointed out that it must be determined whether GST will apply on all transactions or only on margins.
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