Cryptocurrencies purchased from overseas exchanges by investors in India might be subject to a 2% levy, consistent with an Economic Times report.
India’s tax department is looking into whether a 2% equalization levy applies to cryptocurrencies, Economic Times reported earlier on Monday, citing people known with the information.
The levy – also referred to as the “Google tax” – imposes the charge on services offered in India by overseas e-commerce businesses.
Experts have speculated whether this might apply to cryptocurrency exchanges.
“The way the new equalization levy is worded and defined, it appears that it’ll even be applicable on cryptocurrency bought from an exchange not based in India,” Girish Vanvari, the founder of tax-advisory firm Transaction Square, told ET.
The levy would apply to the selling price, therefore exchanges may have to feature it to the value of the assets, he revealed.
Nevertheless, it’s going to be difficult for the govt to impose the levy within the absence of a regulatory framework for the treatment of crypto assets, consistent with Amit Maheshwari, a partner at tax-consulting firm AKM Global.
“In the absence of any guidelines on the treatment of cryptocurrencies, there’s ambiguity in how these would be treated under the tax laws and FEMA [Foreign Exchange Management Act],” he outlined.
Legislation has been within the works in recent months to ban crypto-assets outright in India.
However, there have been signs earlier this month that the govt would take a more lenient approach & classify Bitcoin [BTC] as an asset class, and have the cryptocurrency sector regulated by the Securities and Exchange Board.