Existing Indian law could impose 2% levy on crypto bought from offshore exchanges
According to local sources, the Indian Government’s 2% “equalisation levy” could be extended to crypto-assets purchased from offshore exchanges.
Analysts are inferring that existing law could require a 2% levy to be added onto the settlement price of crypto bought from foreign-based crypto exchanges operating in India’s market, according to the report from Economic Times.
The equalisation levy was first introduced by the government in 2016, imposing a 6% tariff on payments for e-commerce supply and services to non-resident companies which are not having a permanent establishment in the country.
However, the equalisation levy was updated in mid-2020. Now dubbed the “Google Tax,” the updated legislation imposed a 2% tax on services provided by off-shore e-commerce operators conducting business in India, with tax experts inferring that the tariff may also apply to foreign-based crypto exchanges servicing Indian customers.
While speaking on the matter, Amit Maheshwari, tax partner at tax consulting firm AKM Global, argued it would be difficult for India’s government to impose a 2% levy without first establishing a broader regulatory apparatus addressing crypto assets.
“In the absence of any guidelines on the treatment of crypto assets, there is ambiguity in how these would be treated under the tax laws and FEMA (Foreign Exchange Management Act),” Maheshwari said.
The regulatory status of crypto assets has long been a contentious issue as the Indian government is reviewing whether to introduce a bill banning crypto outright, with several officials supporting that digital assets should be classified as an asset class.
Meanwhile, The Reserve Bank of India (RBI), appears to have maintained its anti-crypto stance as the RBI Governor, Shaktikanta Das, stating the central bank has “major concerns” regarding cryptocurrency that it has conveyed to the government.