The Indian government may impose a reverse charge goods and services tax (GST) on cryptocurrency investors using foreign exchanges, according to a local media report.
See related article: India GST Council weighs 28% tax on crypto transactions
Fast facts
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The reverse charge would levy a goods and services tax on the investor instead of the service provider.
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Crypto transactions on Indian exchanges are currently subject to 18% GST.
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“If a crypto exchange is based out of India, and is not impacted from GST implication, then the receiver who is based out of India will be liable to pay GST on a reverse charge basis,” an unnamed finance ministry official reportedly told local media. “This could be reflected in 4B of GSTR-1 and is in the final stages of discussion now.”
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If this tax comes into effect, investors trading on foreign crypto platforms may pay a 30% tax on income generated from such trades, 1% tax deducted at source (TDS) as well as GST reverse charge.
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The finance ministry official said that each cryptocurrency purchased by an Indian investor from an unregistered supplier, such as overseas cryptocurrency exchanges, are subject to reverse charges, local media reported.
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India imposed a 30% tax on all crypto income from April 1, and a 1% TDS for transactions exceeding INR 10,000 (US$129) is scheduled to come into effect on July 1, 2022.
See related article: India tax breaks crypto’s back