The India government is considering imposing a “reverse charge” on virtual digital asset investments made through foreign platforms.
A reverse charge is a tax owed by the recipient of goods or services rather than the supplier.
The burden of goods and services taxation (GST) will rest on an Indian investor who purchases services from a domestically unregistered crypto exchange.
According to reports, depending on commissions gained through crypto transactions, the percentage of this reverse charge may be 18 percent.
The legality of virtual digital assets could be examined under schedule 2 of the Central Goods and Services Act, 2017, which specifies the activities or transactions that are to be treated as supplies of goods or services.
India is considering expanding the scope of its goods and services tax (GST) to include cryptocurrency. While the judgment is expected this month at the GST council, investors have already been paying 30% tax on cryptocurrency earnings since April 1.
The Reserve Bank of India raises concerns, but the industry is divided.
The Reserve Bank of India (RBI) warned the Parliamentary Standing Committee on Finance recently that bitcoin could lead to “dollarization.”
The problem with using foreign currency in any economy, according to Jaijit Bhattacharya, president of the Centre for Digital Economic Policy Research, is that the central bank lacks authority over the currency when using monetary policy tools.
Meanwhile, the RBI’s tough position on cryptocurrency continues to cause investors legal concerns.
Despite such worries, the Confederation of Indian Industry (CII) president Sanjiv Bajaj stated in another interview that the business should be controlled rather than outlawed.
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