Foreign cryptocurrency exchanges and bitcoin (BTC) trading venues in India may soon be required to start paying 18 percent goods and services tax (GST), according to an Economic Times report on July 2, 2021.
India’s Crypto Future Looks Grim
Despite the fact that the supreme court of India has since overturned the bank’s ban on bitcoin and other cryptoassets, the future of the country’s crypto space still looks very grim due to unfavorable policies.
In the latest development, local news source The Economic Times has revealed that the Indian government is looking to make it mandatory for overseas crypto exchanges rendering their services to Indian residents to pay an 18 percent goods and services tax.
Sources have made it clear that bitcoin-linked businesses providing Online Information Database Access and Retrieval (OIDAR) services will be required to have an office in the nation for tax purposes or designate somebody that will be fulfilling those duties for them.
Indian Banks Still Wary of Crypto
As reported by BTCManager earlier in May 2021, the Reserve Bank of India (RBI) made it clear that financial institutions are free to service virtual currency-related entities, provided they strictly abide by existing regulations which mandates them to conduct customer due diligence operations including know-your-customer (KYC) and anti-money laundering (AML) checks.
“It has come to our attention through media reports that certain banks / regulated financial institutions have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular dated April 06, 2018. Such references to the above circular by these entities are not in order as this circular was set aside by the Hon’ble Supreme Court on March 4, 2020,” declared the RBI at the time.
However, despite the RBI clearing the air, banks are still not ready to work with crypto exchanges and the current situation of things in the nation is posing serious challenges to these businesses.
While an 18 percent GST tax on crypto trading venues may be on the high side, considering the super volatile nature of digital currencies, it could be the final piece of the puzzle that would finally make financial institutions in the region fully open their doors to crypto market participants.
At press time, the bitcoin price is hovering around $33,016, with a market cap of $618.83 billion according to CoinMarketCap.
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