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One rupee for you, 19 for me: India mulls crypto sales tax

By Aaron Woolner

08:29, 11 May 2022

Mumbai, India, skyline at dusk
India’s authorities are mulling a 28% general sales tax on crypto – Photo: Shutterstock

Indian authorities have unleashed their latest salvo on the country’s crypto users with the suggestion that a 28% general sales tax (GST) be imposed on all crypto transactions, just weeks after a 30% income tax rule was brought in.

According to local media, India crypto volumes dropped over 50% following the 1 April introduction of a tax on cryptos and further still with a subsequent ban on India’s biggest payment provider UPI working with digital exchanges selling tokens such as ETH and BTC.

Ethereum to US dollar (ETH/USD)

In a move that could have sparked George Harrsion to pen a song, India’s Goods and Service Tax (GST) Council is now looking to levy a 28% tax on all crypto transactions. 

If implemented, the GST move would treat digital assets as equal to gambling, by applying the same tax treatment as lotteries, casinos and racecourses in India, an analogy that was recently made by an Indian MP

India’s authorities’ shadow ban on domestic crypto exchanges by cutting their access to UPI (Unified Payments Interface – essentially a dometic Indian version of SWIFT) saw US exchange Coinbase end plans for an Indian service, three days ahead of launch.

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UPI handles roughly 40% of transactions across India and National Payments Corporation of India’s 7 April statement that it is ‘not aware of any crypto exchange using UPI,’ effectively ended mainstream access to domestic crypto exchanges. 

SOL/USD

180.10 Price
+2.570% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 2.2652

ETH/USD

3,378.89 Price
-3.250% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 6.00

BTC/USD

65,978.90 Price
-0.080% 1D Chg, %
Long position overnight fee -0.0616%
Short position overnight fee 0.0137%
Overnight fee time 21:00 (UTC)
Spread 106.00

DOGE/USD

0.13 Price
-0.730% 1D Chg, %
Long position overnight fee -0.0753%
Short position overnight fee 0.0069%
Overnight fee time 21:00 (UTC)
Spread 0.0012872

Indian digital exchange WazirX’s co-founders Nischal Shetty and Siddharth Menon have reportedly relocated to Dubai while other users are trading via offshore accounts

Speaking on an earnings call yesterday, the Coinbase CEO Brian Amrstrong said that following interactions with the Reserve Bank of India (RBI), India’s central bank, the digital asset exchange severed its UPI link, and its plans to trade digital currencies.

“So a few days after launching, we ended up disabling UPI because of some informal pressure from the Reserve Bank of India, which is kind of the Treasury equivalent there,” the CEO said.

NASDAQ listed Coinbase saw revenue of $1.2bn for the first quarter of 2022, which led to net loss of $430m, compared with a profit of $840m in the fourth quarter.

Markets in this article

BTC/USD
Bitcoin / USD
65978.90 USD
-54.25 -0.080%
COIN
Coinbase Global Inc (Extended Hours)
246.05 USD
-12.55 -4.860%
ETH/USD
Ethereum / USD
3378.89 USD
-113.33 -3.250%
NDAQ
Nasdaq
62.80 USD
-0.25 -0.400%
NDAQ
Nasdaq
62.80 USD
-0.25 -0.400%

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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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