Since the Indian crypto industry won a monumental victory in the Indian Supreme Court against the Central Bank, the bank has been silent regarding the issue of taxation for the crypto sector. Its guidelines remain as they were before the court ruling.
Crypto Exchanges Want Clarity
According to a recent local media report, the crypto exchanges operating in India have approached the Central Bank to provide them with clarity on taxation for the crypto sector. Besides that, they want the central bank to provide them with clarity on how digital currencies are classified in India. Specifically, they want to know if digital currencies are classified as services, goods, currency, or commodities. With that clarification, it would enable them to know where they fall under the nation’s Good’s and Service Tax (GST) or any other framework under which they should be taxed.
At the start of 2020, the Supreme Court overturned a ban imposed on Indian banks. The ban imposed by the central bank in 2018 had stated that the Indian banking system should not handle any financial transactions emanating from the crypto sector. It had been a major blow for the crypto sector at the time. While it was still legal to trade in crypto in India, most people found it too complex to trade in crypto-to-crypto pairs and P2P exchanges, which were the only ones that could operate under the ban. Consequently, it caused many crypto exchanges and startups in the crypto sector to suspend their operations in the country.
There is Still Hostility to the Crypto Sector
According to the report, those operating in the crypto sector are still facing a lot of hostility. The reason for this is that while the ban was lifted, the Central Bank did not offer any clarification to banks on how they should handle transactions related to the crypto sector.
Praveenkumar Vijayakumar, the Chairman & CEO Belfrics Global, told the local media publication that if the central bank did not offer the clarification, crypto exchanges in India were headed for a clash with the tax authority. He added that if crypto exchanges were forced to pay the GST tax for each transaction, most crypto exchanges in the country would be financially crippled.