India plans to introduce reverse charge tax on foreign crypto platforms
According to experts, the reverse charge is likely to be set at 18%
By Shashank Bhardwaj
The government of India is reportedly set to introduce a "reverse charge" on virtual digital asset investments on overseas platforms as part of the latest round of crypto regulations to be implemented in the country. A reverse charge is an indirect tax obligation that falls on the recipient of goods or services rather than the supplier.
As a result, goods and services taxation (GST) will fall on the investor, not the service provider, when an Indian investor acquires services from a domestically unregistered crypto exchange.
“If a crypto exchange is based out of India, and is not impacted by GST implication, then the receiver who is based out of India will be liable to pay GST on a reverse charge basis,” a source told Business Today TV. “This could be reflected in 4B of GSTR-1 and is in the final stages of discussion now.”
According to reports, this reverse charge may be set at 18%, depending on commissions gained through crypto transactions. The government also believes that the law on the applicability of GST to virtual digital assets is very clear. "The legality of virtual digital assets could be considered under schedule 2 of The Central Goods and Services Act, 2017, which mentions the activities or transactions to be treated as supply of goods or supply of services," the source said.
India is also considering including cryptocurrency in its goods and services tax (GST). The government already levies an 18% GST on financial intermediaries that facilitate the buying and selling of cryptocurrency. However, it is still unclear how cryptocurrency and services like crypto mining will be taxed.
If the proposed tax is implemented, investors trading on international crypto platforms will be subject to a 30% tax on their profits, a 1% tax deducted at source (TDS), and a GST reverse charge.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash
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