According to local sources, the Indian Government’s 2% “equalisation levy” could be extended to crypto-assets purchased from off-shore exchanges.
According to a June 22 report from Economic Times, analysts are inferring that existing law could require a 2% levy to be added onto the settlement price of crypto bought from overseas-based crypto exchanges operating in India’s market.
The equalisation levywas first introduced by the government in 2016, imposing a 6% tariff on payments for e-commerce supply and services to non-resident companies without a permanent establishment in India.
However, the equalisation levy was updated in mid-2020. Now dubbed the “Google Tax,” the updated legislation imposed a 2% tax on services provided by off-shore e-commerce operators conducting business in India, with tax experts inferring that the tariff may also apply to foreign-based crypto exchanges servicing Indian customers.
“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,” Girish Vanvari, founder of tax advisory firm Transaction Square, told Economic Times. He added:
“The levy is on the selling price and companies may be required to add this to the cost of the crypto assets.”
Amit Maheshwari, tax partner at tax consulting firm AKM Global, argued it would be difficult for India’s government to impose a 2% levy without first establishing a broader regulatory apparatus addressing crypto assets, stating:
“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).”