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India considers taxing crypto purchases from overseas exchanges

India considers taxing crypto purchases from overseas exchanges
India’s tax department is reportedly looking to start applying an ‘equalization levy’ to crypto assets, forcing investors to pay an additional 2% for each purchase from exchanges outside the country.

The country’s digital tax, popularly known as the ‘Google tax’, came into effect over a year ago. It is chargeable at a rate of 2% on consideration received by non-residents who operate digital businesses targeting, among other things, the Indian market.

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The equalization levy could apply to the selling price and, therefore, exchanges may need to add it to the cost of the assets, according to Girish Vanvari, the founder of tax-advisory firm Transaction Square, as quoted by the Economic Times.

“The way the new equalization levy is worded and defined, it appears that it will also be applicable on cryptocurrency bought from an exchange not based in India,” he said.

However, analysts have expressed doubt over the feasibility of applying the tax to crypto investing in light of the underdeveloped regulatory framework in relation to cryptocurrencies.

READ MORE: Bitcoin out, digital rupee in: India cracks down on private cryptocurrencies while seeking to launch its own digital coin

“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),” Amit Maheshwari, a partner at tax consulting firm AKM Global, told the media.

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