Indian Crypto Exchanges Seek Tax Clarification from Regulator

The Indian crypto exchanges have approached the Reserve bank of India for clarity on digital currency taxation in the country.

Local daily Economic Times reported on Monday that the Exchange Exchange An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv An exchange is known as a marketplace that supports the trading of derivatives, commodities, securities, and other financial instruments.Generally, an exchange is accessible through a digital platform or sometimes at a tangible address where investors organize to perform trading. Among the chief responsibilities of an exchange would be to uphold honest and fair-trading practices. These are instrumental in making sure that the distribution of supported security rates on that exchange are effectiv Read this Term platforms in the country had written a collective letter to the central bank seeking the clarifications.

They are also seeking clarification on the classification on the status of the digital currencies in the country - if they fall under commodity, currency, goods, or a service. This classification will determine if they fall under the country's Goods and Services Tax (GST) or any other tax framework.

Earlier this year, the Indian Supreme Court lifted the ban on the banks to provide services to the cryptocurrency exchanges and startups.

The banking ban was imposed by RBI in 2018, however, the digital currencies were still legally traded in the country - mostly in peer-to-peer exchanges or crypto-to-crypto pairs - as there was no ban on them.

Is the regulator honoring the court's decision?

The report also revealed that the banks are still hostile towards providing services to the Indian exchanges due to the lack of any clarification by the regulator.

Notably, the central bank did not issue any updated circular to the banks clarifying its position on Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the netw Read this Term after the verdict of the apex court.

"If the digital assets are not exempted from GST, the digital currency exchanges in India are going to have a standoff with the tax authority," Praveenkumar Vijayakumar, Chairman & CEO Belfrics Global, told the local publication.

"In early 2019, the tax department had reached out to several cryptocurrency platforms in this regard. In the wake of the recent Supreme Court ruling, we have also approached the RBI for clarity on this, as if we pay GST on the whole transaction, then most platforms would not be able to survive."