Equalisation levy on crypto exchanges in India will not apply to investors, according to the Finance Minister
India’s finance minister told Parliament that the tax called ‘equalization levy’ applies to e-commerce firms, not investors. Nirmala Sitharamanalso disclosed that the government has no data on how many cryptoexchanges are currently operational in the country or how many Indian investors are on the platforms.
- According to her, the Modi administration has no conclusive information on whether or not these exchanges are involved in any illicit activities.
AdvertisementIndia may not be looking to impose its equalisation levy, often called the ‘Google Tax’, on investors putting money into cryptocurrencies.
Equalisation levy is imposed on e-commerce operators, not on the investor.
The controversial Google Tax, which has historically been imposed on foreign companies — like Amazon, Facebook and others — earning revenues from India for advertising online.
Earlier reports had indicated that trading cryptocurrencies on foreign exchanges may attract a 2% equalisation levy, but they did not relieve how the tax would be imposed. Sitharaman’s comments, in response to a query from Sushil Kumar Modi — the deputy chief minister of the eastern state of Bihar — shed some clarity.
The Indian government data has no data on crypto exchanges or investors
Modi’s original question to Sitharaman was whether or not the government collects information about crypto exchanges and their investors in India.
According to the Finance Minister, the Modi administration does not collect any such information. As per data shared by WazirX CEO, Nischal Shetty, the country has over 15 million investors trading in crypto and the monetary value of that trade comes up to around ₹15,000 crore.
In addition to exchanges, India is home to over 350 blockchain and crypto startups — many of which have raised money from bigger global exchanges. WazirX — the largest crypto exchange in the country — for instance, is owned by crypto giant Binance.
Finance Ministry has no insight into the how cryptocurrencies are being used
In addition to highlighting the lack of data on how many companies are operating within the crypto space, Sitharam also disclosed that her department has not received information on whether any of these exchanges are involved in drug trafficking or other forms of money laundering in the country.
However, the authorities have been digging in. Earlier this month, the Enforcement Directorate (ED) accused WazirX of allegedly violating provisions of the Foreign Exchange Management Act (FEMO) for
More recently, an individual got arrested by the Hyderabad police for running a cryptocurrency scam to the tune of ₹3,145 crore. According to the cops, the person allegedly used WazirX to befriend the victims. Meanwhile, the crypto exchange told Medianama that it is not involved in any way.
Crypto regulation in India still hangs in the balance
India has been on the verge of formulating a bill to regulate cryptocurrencies in the country. It was expected to be tabled during the ongoing Monsoon Session of the Parliament, but stakeholders now believe that is unlikely.
The crypto industry in India has been in a flux of sorts, following clashes with the country’s central bank, the Reserve Bank of India (RBI). The bank had issued an informal note to lenders in May, which led them to withdraw services from many crypto exchanges in the country.
Exchanges in turn had to stop taking rupee deposits from investors, and though the situation has improved since, some have still limited the services they can provide.
For a more in-depth discussion, come on over to Business Insider Cryptosphere — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.
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