CryptoWallCity vs MEXC Exchange

India imposes a goods and services tax of up to 28% on the crypto sector

Indian tax authorities are planning to include crypto activities in the Goods and Services Tax (GST) category.

According to Indian media reports, the GST board has established a committee to study and map various crypto activity such as trading, staking and wallets for tax purposes. Currently, crypto exchanges in India are taxed at 18% GST and are considered as intermediaries providing financial services related to digital assets.

Consistent with government policy

The GST Board is planning to combine crypto activities with other speculative activities such as gambling, lotteries, betting and horse racing. The GST Committee was established to study the operation of the cryptocurrency sector and related tax rates. The GST Committee will present its report at the next GST board meeting, however a meeting date has not yet been set.

The GST Council’s consideration of the high tax rate is seen as consistent with the Indian government’s tough stance towards the crypto industry.

The trail of anti-crypto moves

If the GST is increased from 18% to 28%, it will be another blow to the Indian crypto sector. Through its annual budget, the government of India has introduced a new tax policy for the crypto industry, levying a 30% capital gains tax and a 1% tax deduction at source (TDS) for all digital asset transfers, applicable from July 1, 2022.

This move caused a significant drop in trading volume on cryptocurrency exchanges compared to the same period last year.

The Indian crypto market is also facing outrage from regulators, who have completely discontinued crypto payment services for businesses. At the same time, leading exchanges like Coinbase, WazirX, CoinSwitch Kuber and CoinDCX have all disabled the option to deposit in Indian Rupees.

Besides the 30% income tax on crypto profits, 1% TDS, and 28% GST, crypto investors must also take into account exchange fees and some other taxes and surcharges. Taking all of them together, crypto investments in India become extremely expensive.

On top of that, the lack of regulations that provide a safe and legal environment for investors makes crypto investments in the world’s second most populous country less attractive.

Without India, there would be UAE

With all the “aggressive” anti-crypto moves by the Indian Government today, there is a high possibility that crypto companies will leave the country for countries with a more open business environment.

On the other hand, in March 2022, the UAE issued a new regulatory framework for cryptocurrencies that aims to protect investors and design optimized international standards for more efficient industry governance. The move comes just a month after the UAE Securities and Assets Authority completed the final steps to clear the legal path to welcome Crypto companies.

Soon after, many of the world’s leading cryptocurrency exchanges quickly set foot in. On March 15, 2022, Binance announced that it had obtained a license to be a cryptocurrency service provider in Dubai and Bahrain. This is seen as a major milestone for the world’s largest cryptocurrency exchange, setting the stage for a major boost in the Middle East.