The cryptocurrency exchanges in India, which had witnessed a renewed wave of interest and enthusiasm after the Supreme Court’s landmark ruling against the RBI, have written to the central bank of India for seeking clarity on the tax front.
Following the abolishing of RBI’s ruling that dramatically reduced the scope of cryptocurrency exchanges in India and the collapse of the country’s leading banks, the cryptocurrency trading boom was imminent.
In fact, Nischal Shetty of WazirX, India’s largest cryptocurrency exchange acquired by Binance, took to Twitter last month to share his thoughts on how Facebook’s investment in Jio would eventually benefit the Indian crypto industry. Yes, for the cryptocurrency exchanges in India, the year started on a positive note.
Cryptocurrency exchanges in India continue to swim against the tide
However, it’s far from being plain sailing so far. The cryptocurrency businesses in India are still unable to gain a foothold as unclear directions continue to limit their banking interactions with indecisive tax reforms.
Thus, as per today’s report by ET, the exchanges have now formally drafted a letter to the RBI with the hope to gain some transparency. They want to know why they are still being denied banking services despite the overruling of the ban order and the reason for lack of willingness to offer guidance and instructions from the regulator.
As lenders, the cryptocurrency exchanges in India want better clarity on the classification of their business. Their categorization under commodities, goods, and services or currencies will ultimately decide how they will be taxed under the new GST system.
Crypto businesses in India cry for help
Praveenkumar Vijayakumar, who is the CEO and chairman of a digital assets platform called Belfrics Global, said that if the digital currencies are exempted from GST, it will eventually lead to a deadlock situation between the tax officials and the cryptocurrency exchanges in India.
The RBI must understand that if it expects us to pay GST on the entire transaction, then most of us wouldn’t be able to survive. Thus, we need to know now if Bitcoin and other cryptocurrencies are taxed under GST so that we can have some clarity on where our businesses are headed, Vijayakumar added assertively.
And while the cryptocurrency exchanges in India continue to await decisions on taxability with bated breath, the need for a legal framework only grows bigger as the decisions will have far-reaching consequences on multiple stakeholders and varied perspectives that drive the Indian crypto market today.