Bitcoin exchanges in India are in a state of confusion if Goods and Services Tax (GST) applicable on their businesses or not. If they are indeed applicable, then what is the correct rate of tax?
This comes in light of the fact that recently, Koinex-one of the few alt-coin exchanges in India revised their fees in the midst of an outcry by many of its users. They increased their fees to 2.36% (inclusive of GST) on withdrawals which until now were free. On various FB crypto-groups there have been hue and cry over this unexpected increase.
Seven of the top exchanges from the country have approached AAR (Advanced Authority of Ruling) to clear this conundrum. AAR is a quasi-judicial body which can assist in deciding the applicability of GST on exchanges operating in India.
I’ve reported recently that Bitcoin exchanges have been targeted by the Income Tax officials and over 500,000 HNI’s were sent notices. This is the latest development in terms of taxation around Bitcoin.
If AAR decides that GST is applicable then it would be a good step forward towards regulating this market in India. Currently most Indian exchanges operate with a high margin of about 20%. If AAR were to define the applicable GST, then it may also be required to define the category for cryptocurrencies as goods, services or currency. Will the GST slab be set at 12% or 18%? Will it be applicable on the entire revenue or only margins/fees? Many of these questions are yet to be answered!
It’s a well known fact that Bitcoin exchanges in India earn their revenues through commission on trades, price-arbitrate and transaction fees. Some exchanges such as Zebpay and Unocoin keep huge margins between buy and sell prices. As per the report on Economic Times-It’s possible that these exchanges may not have paid adequate VAT or sales tax to the authorities. But then again there is so much ambiguity on taxations surrounding cryptos-for both individuals and corporates.
It’s unlikely that we’ll see a resolution soon. But, this hasn’t deterred people in India from investing in cryptos. Exchanges are flooded with new user signup requests and they are unable to cope up with the KYC-which is mandatory as per govt rules.
Hopefully, AAR will come through on Indian exchange request for regulating the tax structure and making easier and safer for everyone to transact and trade. No matter which direction the ruling goes, crypto is here to stay in India and it will continue to thrive!
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The bitshares DEX just gets more and more and more and more appealing day after day after day after day :-)
https://bitshares.org/
Centralized exchanges are open invitations to lose your crypto.
I agree! More people need to use DEX over highly centralised ones. Also, India needs more exchanges that operate with transparency. Most are just dealers with exorbitant spreads! :(
@firepower The entire idea behind bitcoin is decentralisation. Imposing taxes on cryptocurrencies kills the very purpose. Zebpay, itself is imposing 18% GST on Deposits. The solution is to buy everything in cash on local bitcoins and transfer it to foreign exchanges or a paper wallet. It's the safest bet for now.
Definitely Agree
@firepower what do you think the Indian govt's stance will be? will they go towards banning crypto trading in the country like they don't allow forex trading and non-indian derivatives trading?
I joined Bitshares few days ago and I really feel better about it more than other exchanges I used before.
Hey can you help me understand whats bitshares and whats it utility
https://en.wikipedia.org/wiki/BitShares
https://bitshares.org/
Thanks @onceuponatime
I hope soon government will find better solutions for it.
As I am a freelancer, can you suggest me how will I pay taxes if I sell my bitcoins.
I overheard that sooner or later Indian Authorities might not legalize Bitcoins along with other cryptocurrencies. I haven't heard that Government has declared it as illegal trading nor did it say legal to use.
Now, just for an example, in near future, authorities decide to shut down all exchanges and other activities on these digital coins, then what would happen with the invoice receipt at the time of investing money to the exchanges with GST and all. If CRYTOS are of Illegal trading then why pay TAX to Govt or why the hell GOVT. taking TAX on illegal products.
I think government will enjoy the GST and income tax for couple of years. Till then most of the countries will have their cryptocurrency regulations in place. India will simply mix and match them to comeup with their own regulations. They definitely can't keep Indians away from a world wide revolution.
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nice piece of info @firepower
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@qami
seriously those Governments are fighting anything that could help normal people and take them out of sufferings and facilitates their lives.
I personally hate the name TAX wherever I see it.
great post, rare genius
I agree! All the more individuals requirement to utilize DEX over Exceedingly brought together ones. Also, india needs additional exchanges that work with transparency. The vast majority are simply dealers for over the top spreads :(
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Nice post and useful info
Nice post
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Thnx for the information
Good work my friend
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Hay nice post by the way. I agree that the tax must be regulate by your country next time. But i think the tax not more 1-2%. If tax more than 2% it makes trader feel bad to get profit.
This is an eyes opener on the situation of Bitcon in India with respect to their economy. To stablize the economy india AAR needs to find a balance between their exchange rate because their are still high demand of people going into crypto. An economy team must be put in place to annex the problem
without any doubt, bitcoin will be here for the end of the centuries, I am very sorry for the high costs of your country in the exchange market, when this monopoly often happens,
always the government agencies will want an apportion of money, not only in their country, in any part of the world
excellent work dear friend @firepower
your information is really very helpful
https://steemit.com/teammalaysia/@asyrafahamed/malaysia-is-not-planning-on-ban-against-crypto-what-does-this-means-for-malaysia-steemians
Meanwhile in Malaysia, we just got 'greenlight' for crypto trading few days ago.
Government are doing their best to get hold of at least small percentage of crypto currencies enthusiasts.
Imposing tax burdens ia not the right way, it will lead to lack of interest by those who barely follow up with cryptos.
However, I hope things get better soon.
I think there should be some regulation and Taxes should be applied.
It's a step to regulating it as a legitimate source of income and legitimate currencies and that is only going to bring in more people into the market than there already are. I think this is a great step to bringing our country forward in yet another industry because the people here only either believe word of mouth, or what they see on TV and I think this is definitely news everywhere in the world right now. And India is only moving steps ahead.
Legitimizing this is definitely going to make this country something more than it already is.
Great post though mate.
That is why we need more decentralized exchanges :)
very nice updated information about BTC in India facing new taxes. I hope it will not increase in near future.I m following your post.
I guess we will see something similar in the west...
very informative post friend, keep it up and please post such kind of worthy stuffs.
thats fine.
you have to rvel the complete circumstances behind this.
bitcoin is king.
thanks for nice post.
cheers.
letes connect.
@qami
I hope the state at which bitcoin is in India will not create a problem in other countries that has invested in bitcoin.
Good post. Thanks for sharing buddy @firepower
please share how to play bitcoin @firepower
The bitshares DEX just gets more and more and more and more appealing day after day after day after day :-)
https://bitshares.org/
Centralized exchanges are open invitations to lose your crypto.
How many dam coins are there lol? Love this post, keep it up! @muscleroast.com
This is an outrage !! First they won't allow us to trade bitcoin legally, then they are taking our bitcoin earnings and now they want to freaking add GST ??? Like income tax and other stupid taxes weren't enough then they add 20 to 30 percent tax on bitcoin, now they are wanting to add another 12 to 18 percent ? Have they ever used the tax money for anything good ? Seriously is this even a free Democratic country or a totalitarian state ? I better plan to move to another country soon. At this rate there is no hope for growth in India.
Btw @firepower, how do you cash out ?? I would like to learn, as I want to cash out soon.
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Good
My story is infused by karma and humor.
I first stumbled upon Bitcoin when it was just about $520 a coin, and back then I couldn't understand what Bitcoin is. All I know is that people are believing that it has the potential to increase in value.
My friend and I were supposed to jump into the boat, but then one of our office mates, suddenly butted in. Well, actually, he was promoting it. However, we had already history with this guy, and most of what he offers turn out to be "scam", unintentionally of course. He just attracts bad luck with these things. So, we took it as a joke, and my colleague and I decided to scrap the idea.
It was one heck of a bad decision. It was karma for making fun of the guy. Had we bought it as that price, we could have been millionaires already. Still, there was a lot of uncertainty. We didn't know it will hit this big.
We just always reminisce with both *regret and laughter.
2% fee I think is too much. Good thing other exchanges are kind enough to make it as low as possible.
I'm reading your posts about situation in India and always compare it with my country. I feel really sorry about that and i'm afraid that soon or later it will be here as well:(((. Our government is hungry for money so i no doubt that they are thinking already how to get our crypto 😒😒😒. Such a pity that we can't escape somewhere far away from them all and create our own world 🙄😁😁.
Our govt is in state of confusion actually. at one point of time they said don't deal in bitcoin, its scam, used in terrorist activities. They didn't said its illegal but indirectly they said the same and to some commodity which the govt is trying to declare illegal and regulating the currency is totally reverse of it. So govt is confused should we declare it illegal in India or should we collect taxes from it.
Heard rumours that Russia and China or Japan wants to ban BTC
Personally i really interested for your link . thank you so.....much, carry on your life
Good post. Thanks
Thanks @firepower
This is going to be a chicken and egg problem as first AAR will have to define what cryptos are. It seems there is a committee of parliament members or experts are working on the definition.
People are saying that 1-2% is too much tax. It looks like the USA is going to be treating crypto gains as real property gains which would be regular income. That would be if you're in the lowest income bracket that you would pay 12% tax. If you're in the higher brackets you can be paying 30+%.