India is considering imposing a “reverse charge” on virtual digital asset investments made through foreign platforms.
A reverse charge is a tax owed by the recipient of goods or services rather than the supplier.
The burden of goods and services taxation (GST) will rest on an Indian investor who purchases services from a domestically unregistered crypto exchange.
“If a crypto exchange is situated in India and is not subject to GST, then the receiver will be obligated to pay GST on a reverse charge basis,” a source told Business Today TV.
According to reports, depending on commissions gained through crypto transactions, the percentage of this reverse charge maybe 18 percent.
India might blow up the crypto growth in the country
India is considering expanding the scope of its goods and services tax (GST) to include cryptocurrency. While the judgment is expected this month at the GST council, investors have already been paying 30% tax on cryptocurrency earnings since April 1.
“[The government] is unlikely to tax crypto on the overall value of the transaction, per se,” the source added to Business Today. The conversations are at a point where more thought is required.”
The Reserve Bank of India (RBI) warned the Parliamentary Standing Committee on Finance recently that bitcoin could lead to “dollarization.”
The problem with using foreign currency in any economy, according to Jaijit Bhattacharya, president of the Centre for Digital Economic Policy Research, is that the central bank lacks authority over the currency when using monetary policy tools.
Meanwhile, the RBI’s tough position on cryptocurrency continues to cause investors legal concerns.
Despite such worries, the Confederation of Indian Industry (CII) president Sanjiv Bajaj stated in another interview that the business should be controlled rather than outlawed. The Indian government is actively developing a cryptocurrency policy. However, crypto earnings are already subject to a 30% tax rate. On July 1, a 1% tax deducted at source (TDS) will be imposed on cryptocurrency transactions.