As recently revealed, the existing laws in the country could mandate a 2% levy on the crypto assets purchases from offshore-based exchanges overhauling India’s market. The 2% equalisation key of the Indian Government could be stretched to the crypto assets bought from off-shore exchanges.
Equalisation Levy of the Indian Government on Crypto Assets
In accordance with a report published on June 22, the analysts are deducing that the existing law could require a 2% levy to be added onto the agreement price of the cryptocurrency purchased from overseas-based crypto exchanges operating in the country’s market
Talking about the equalisation levy, it was introduced by the government in the year 2016, and inflicting a 6% tariff on the payments for e-comm supply and services to non-resident firms without a permanent initiation in India.
However, being updated in the year 2020 and dubbed as the Google Tax, the updated ratification imposed a 2% tax on the services provided by off-shore e-commerce operators conducting businesses in India.
Girish Vanvari and Amit Maheshwari Comment on the Situation
Girish Vanvari, the Founder of Transaction Square, the tax advisory firm said:
“The way the new equalisation levy is worded and defined, it appears that it will also be applicable on cryptocurrency bought from an exchange not based in India.”
In addition to this, he mentioned the requirement of adding this to the existing cost of the crypto assets and said:
“The levy is on the selling price and companies may be required to add this to the cost of the crypto assets.”
Moreover, the tax partner at tax consulting company AKM Global, Amit Maheshwari said:
“In the absence of any guidelines on the treatment of crypto assets, there is ambiguity in how these would be treated under the tax laws and FEMA (Foreign Exchange Management Act).”