Legislation changes set to lower taxes on crypto transactions in India to 1%

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Dec 11, 2020
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According to publications in local media the Indian government plans to regulate the crypto currency exchanges operating in the country as e-commerce platforms, which will reduce the Goods and Services Taxes (GST) users have to pay with every transaction to merely 1% from the current 18%, similarly to taxes paid on India’s regulated stocks exchanges.

Currently all who buy or sell crypto currencies or crypto related products in India are required to pay trading fees in the amount of 18% of the transaction to the Indian government.

The first step towards regulation of the crypto currency market in India was take in July, when the government revealed plans to ask foreign crypto exchanges to be charged the same 18% as the registered home exchanges, when servicing Indian nationals. Up till now foreign exchanges were not required to register in order to service the Indian market and that caused a significant price gap depending on whether your exchange is local or not.

The different proposals for the regulation of the crypto currency market in India range from classifying crypto currencies as commodities to a complete ban on all digital assets. It is notable that in 2020 the Supreme Court of India reversed a decision by the Reserve Bank of India, ordering banks to stop doing business with crypto companies.

India’s Prime Minister Narendra Modi publicly backs the crypto industry and is in favor of regulating the crypto market.

Currently crypto currency exchanges in India are allowed to regulate their activities internally. Those self regulatory regimes include Know Your Client (KYC) policies, where clients are asked to provide identification documents and bank details, as well as Anti Money Laundering (AML) compliance policies. With the proposed changes of the legislation however, that is about to change.

According to the new proposals crypto currency exchanges will be divided into three categories – exchanges that act as facilitators of crypto transactions, exchanges that allow buying and selling of crypto currencies, and trading platforms, designed especially for trading with crypto CFDs.

The largest crypto currency exchanges in the country by trade volume include Binance, OKEx, Coinbase, Kraken, Bitfinex, Bitstamp, WazirX, CoinDCX, Zebpay, Bitbns, Giottus and Unocoin.
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I'd say that those are surprisingly good news coming from India.