Transactions comprising Indian and foreign exchanges, particularly those involving the procurement of crypto assets traded in India, might come under the taxman’s lens. The tax department is inspecting how exchanges that permit trading in India oversee their cryptocurrency float and if there is any transaction where Goods and Services Tax (GST) could be applicable.
Various exchanges function in India; however, only a handful, primarily the large ones, have the actual cryptocurrencies on their books to be purchased or sold by Indian investors and traders. A few large exchanges also comprise holding entities outside India that primarily hold a large chunk of crypto assets. These get transferred later to an Indian entity before any Indian could purchase them.
A few other exchanges match trades between a buyer and a seller. In most cases, either a buyer or a seller is also based out of India, but the trade occurs via exchange. In a few cases, there are transactions that happen between two exchanges and are recorded as a transfer. The tax department is checking if these transactions that involve exchanges could also attract additional GST.
The government is in discussion with the stakeholders if cryptocurrencies need to be banned completely or they should be permitted in a limited way where RBI will primarily regulate them.
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Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.