If you think about Crypto and Tax, what springs to mind? Income tax or capital gains tax? Indirect taxes may not be your first thought. In certain instances, indirect taxes do apply.
Goods And Service Tax (GST)
In India, you have GST on commission fees or margins of crypto trades. You may expect an extra 18% GST on all overseas Crypto exchanges. This will concern Crypto investors.
Indian Crypto exchanges already charge their users GST. They build the tax into the trading fee and add this to the purchase price. The exchanges then pay the GST over to the Indian government.
At the moment, Crypto exchanges outside India are not in the tax net. India is keen to bring them under their tax umbrella. Crypto exchanges with Indian users could become “OIDAR” services or Online Information Database Access & Retrieval. This means tax must apply on data or digital service supplied in India. And that’s even when no physical interface exists.
How Will The GST Be Levied?
It’s not clear how India will tax crypto trading on overseas exchanges. Some say that GST only applies to margins of all transactions. Others say for GST to apply, Crypto assets must be treated as a currency, security or asset. So the next time you make a Crypto transaction, do find out if indirect tax applies! And if you’re unclear, please seek advice from a local tax firm.
