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Overseas cryptocurrency exchanges that have a customer base in India may have to pay goods and services tax (GST) as their services are covered under OIDAR rules.

How they being taxable as OIDAR service? 

OIDAR services are any digital or data services provide to Indian citizens or residents living in India. Indian law stipulates that any such service should be taxed whether there is a physical exchange or not. Government plans to re-categorize foreign crypto exchanges as Online Information database Assess and Retrieval (OIDAR) services

The IGST Act defines OIDAR to mean services whose delivery is mediated by information technology over the internet or an electronic network and the nature of which renders their supply essentially automated and involving minimum human intervention and impossible to ensure in the absence of information technology and includes electronic services such as :

  • advertising on the internet
  • providing cloud services
  • provision of e-books, movie, music, software, and other intangibles through telecommunication networks
  • providing data , retrievable or otherwise , to any person in electronic form through a computer network
  • online supplies of digital content (movies , television shows, music and the like) digital data storage
  • online gaming

It seems as per sec 2(17) of IGST act foriegn Crypto exchanges is not clearly be covered under the definition of OIDAR services. Thus department needs to re-categorise overseas crypto exchanges with Indian users as Online Information Database Access and Retrieval (OIDAR) services, and govt. is thinking about same.

What about Indian Crypto exchanges? 

Still there is no clarity on whether cryptocurrency is an asset, security or currency.

So due to lack of clarification by CBIC most of Indian exchanges pay the 18% GST on their profits and commissions. The tax is built into the trading fee that exchanges add to the buying price of Bitcoin, Dogecoin and more. The exchanges pay GST to the government as part of their general tax payments.

What I thinks, government will  likely to come with notification very shortly to bring down foreign crypto exchanges under GST Act.

Also there is clarification requirement from department about GST rate whether 18% or 28% for both Indian and Foreign crypto exchanges.

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