Reports are doing the rounds that India might charge an additional 18% Tax for cryptocurrency exchanges.
India has GST – Goods and Services Tax, which businesses pay on their profits to the government. They pay commissions to the government in the absence of clarity from the country’s tax authority.
It just looks like very soon crypto exchanges who are offering services in India will have to pay an extra 18% tax. This will also be applicable to exchanges that are not based in the country.
Currently, not all exchanges that are based outside India pay the goods and services tax (GST) tax. The country’s tax authority are working out to see if they will be subject to the levy, which will be applicable on all transactions which will involve the goods and services.
For clarity, Online Information Database Access and Retrieval services (hereinafter referred to as OIDAR) is a category of services provided through the medium of internet and received by the recipient online without having any physical interface with the supplier of such services. E.g. downloading of an e-book online for a payment would amount to receipt of OIDAR services by the consumer downloading the e-book and making payment.
The IGST Act defines OIDAR to mean services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimal human intervention and impossible to ensure in the absence of information technology and includes electronic services such as, ––(i) advertising on the internet;(ii) providing cloud services;(iii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet;(iv) providing data or information, retrievable or otherwise, to any person in electronic form through a computer network;(v) online supplies of digital content (movies, television shows, music and the like);(vi) digital data storage and (iv) online gaming.
For any supply to be taxable under GST, the place of supply in respect of the subject supply should be in India. In case, both the supplier of OIDAR Service and the recipient of such service is in India, the place of supply would be the location of the recipient of service i.e. it would be governed by the default place of supply rules. What happens in cases where the supplier of service is located outside India and the recipient is located in India. In such cases also the place of supply would be India and the transaction would be amenable to tax
Thus, now overseas crypto exchanges might also be subject to GST on the grounds of data services. As opposed to an outright ban, this appears to be a lenient approach.
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