Indian Bitcoin Exchanges Face GST Conundrum!
Bitcoin exchanges in India are in a state of confusion if Goods and Services Tax (GST) applicable on their businesses or not. If they are indeed applicable, then what is the correct rate of tax?
This comes in light of the fact that recently, Koinex-one of the few alt-coin exchanges in India revised their fees in the midst of an outcry by many of its users. They increased their fees to 2.36% (inclusive of GST) on withdrawals which until now were free. On various FB crypto-groups there have been hue and cry over this unexpected increase.
Seven of the top exchanges from the country have approached AAR (Advanced Authority of Ruling) to clear this conundrum. AAR is a quasi-judicial body which can assist in deciding the applicability of GST on exchanges operating in India.
I’ve reported recently that Bitcoin exchanges have been targeted by the Income Tax officials and over 500,000 HNI’s were sent notices. This is the latest development in terms of taxation around Bitcoin.
If AAR decides that GST is applicable then it would be a good step forward towards regulating this market in India. Currently most Indian exchanges operate with a high margin of about 20%. If AAR were to define the applicable GST, then it may also be required to define the category for cryptocurrencies as goods, services or currency. Will the GST slab be set at 12% or 18%? Will it be applicable on the entire revenue or only margins/fees? Many of these questions are yet to be answered!
It’s a well known fact that Bitcoin exchanges in India earn their revenues through commission on trades, price-arbitrate and transaction fees. Some exchanges such as Zebpay and Unocoin keep huge margins between buy and sell prices. As per the report on Economic Times-It’s possible that these exchanges may not have paid adequate VAT or sales tax to the authorities. But then again there is so much ambiguity on taxations surrounding cryptos-for both individuals and corporates.
It’s unlikely that we’ll see a resolution soon. But, this hasn’t deterred people in India from investing in cryptos. Exchanges are flooded with new user signup requests and they are unable to cope up with the KYC-which is mandatory as per govt rules.
Hopefully, AAR will come through on Indian exchange request for regulating the tax structure and making easier and safer for everyone to transact and trade. No matter which direction the ruling goes, crypto is here to stay in India and it will continue to thrive!
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The bitshares DEX just gets more and more and more and more appealing day after day after day after day :-)
https://bitshares.org/
Centralized exchanges are open invitations to lose your crypto.
I agree! More people need to use DEX over highly centralised ones. Also, India needs more exchanges that operate with transparency. Most are just dealers with exorbitant spreads! :(
@firepower The entire idea behind bitcoin is decentralisation. Imposing taxes on cryptocurrencies kills the very purpose. Zebpay, itself is imposing 18% GST on Deposits. The solution is to buy everything in cash on local bitcoins and transfer it to foreign exchanges or a paper wallet. It's the safest bet for now.
Definitely Agree
@firepower what do you think the Indian govt's stance will be? will they go towards banning crypto trading in the country like they don't allow forex trading and non-indian derivatives trading?
I joined Bitshares few days ago and I really feel better about it more than other exchanges I used before.
Hey can you help me understand whats bitshares and whats it utility
https://en.wikipedia.org/wiki/BitShares
https://bitshares.org/
Thanks @onceuponatime
I hope soon government will find better solutions for it.
As I am a freelancer, can you suggest me how will I pay taxes if I sell my bitcoins.
I overheard that sooner or later Indian Authorities might not legalize Bitcoins along with other cryptocurrencies. I haven't heard that Government has declared it as illegal trading nor did it say legal to use.
Now, just for an example, in near future, authorities decide to shut down all exchanges and other activities on these digital coins, then what would happen with the invoice receipt at the time of investing money to the exchanges with GST and all. If CRYTOS are of Illegal trading then why pay TAX to Govt or why the hell GOVT. taking TAX on illegal products.
I think government will enjoy the GST and income tax for couple of years. Till then most of the countries will have their cryptocurrency regulations in place. India will simply mix and match them to comeup with their own regulations. They definitely can't keep Indians away from a world wide revolution.
such a great , hahaha, I love steem and bitcoin
nice piece of info @firepower
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@qami
seriously those Governments are fighting anything that could help normal people and take them out of sufferings and facilitates their lives.
I personally hate the name TAX wherever I see it.
great post, rare genius
I agree! All the more individuals requirement to utilize DEX over Exceedingly brought together ones. Also, india needs additional exchanges that work with transparency. The vast majority are simply dealers for over the top spreads :(