According to a report by CNBC TV18 India, the country’s government plans to reclassify cryptocurrency exchanges as e-commerce platforms, which will reduce the goods and services (GST) fee that users have to pay per transaction or per transaction to 1%.
The Government of India currently imposes an 18% VAT on transactions made on registered cryptocurrency exchanges, which are transferred to users as trading fees. This process is similar to the tax protocol of stockbrokers in India.
However, depending on the legal location of the stock exchange, the new GST offer may lead to increased tax liability for some users. Back in July, Business Insider India reported that the government could require foreign exchange bureaus to charge customers the same 18% GST as their domestic counterparties when doing business with Indian nationals. Offshore cryptocurrency exchanges are usually exempt from GST registration in India, resulting in a large tax gap between users of different exchanges.
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Indian lawmakers continue to disagree on the establishment of a regulatory framework for cryptocurrencies in the country. The proposed law ranges from classifying cryptocurrencies that last to a complete ban on trading in digital assets. Last year, India’s Supreme Court overturned a ban imposed by the Reserve Bank of India that prevented banks from doing business with crypto companies. Meanwhile, Prime Minister Narendra Modi has publicly supported blockchain technology, but has also been the victim of a Twitter scam.