The government of India plans to reclassify cryptocurrency exchanges as e-commerce platforms, which will reduce the tax on goods and services that users must pay per transaction or per transaction to 1 %.
According to Cointelegraph, the Indian government currently imposes an 18% GST on transactions made on registered cryptocurrency exchanges, which are passed on to users as trading fees. The process is similar to the tax protocol for stock brokerage firms in the country.
However, depending on the legal domicile of the exchange, the new GST proposal could in fact lead to more tax liability for some users.
Back in July, Business Insider India reported that the government could require foreign exchange exchanges to charge the same 18% GST as their domestic counterparts when making a transaction. Business with Indian nationals.
Overseas cryptocurrency exchanges are usually exempt from GST registration in India, which leads to a large tax gap between users of different exchanges.
Indian lawmakers remain sharply divided over creating a regulatory framework for cryptocurrencies in the country. The proposed legislation ranged from classifying cryptocurrencies as commodities to outright bans on trading digital assets.
Last year, India's Supreme Court overturned the Reserve Bank of India's ban on banks from doing business with crypto firms.
Meanwhile, Prime Minister Narendra Modi publicly supported blockchain technology, but became the victim of a Twitter scam the previous year.
