Thursday, May 19, 2022

Government Will Not Impose Equalization Levy On Crypto Exchanges: Finance Minister

The Indian crypto investors might not have to pay an equalization levy, popularly known as ‘Google Tax’ for digital assets, according to a report. 

On July 27, while addressing the Monsoon session of Parliament, Nirmala Sitharaman, the Finance Minister of India, specified, “Equalisation levy is imposed on e-commerce operators, not on the investor.”

A report published earlier, indicated that the government is planning to impose a 2 percent levy for trading cryptos on foreign exchanges. However, it did not happen as the authorities were not able to decide how they would impose the tax.

India Did Not Collect Crypto Exchanges Data

During the budget session, the deputy chief minister of the eastern state of Bihar Sushil Kumar Modi asked the Finance Minister of India to shed some clarity on the total number of crypto exchanges in the country. To which, Sitharaman replied that the government does not have data on crypto exchanges or investors.

Nischal Shetty, the CEO of WazirX, shared the data with the government, which stated that there are over 15 million crypto investors in India and the monetary value of that trade comes up to around Rs. 15,000 crore.

As per the report, there are more than 350 blockchain and crypto startups in India and most of them have leveraged support from bigger global exchanges. Even, one of India’s largest crypto exchanges WazirX is owned by crypto giant Binance.

Notably, the government also does not know whether the exchanges operating in India are processing any transaction related to illegal activity. 

However, the authorities have been digging in. A month ago, the Enforcement Directorate (ED) issued a show-cause notice against WazirX for allegedly violating provisions of the Foreign Exchange Management Act (FEMA) for cryptocurrency deals worth Rs.2,790.74 crore.

Recently, Hyderabad Police arrested an individual for operating a crypto scam to the tune of Rs.3145 crore, through WazirX. However, the crypto exchange has clarified that it was not involved in this activity.

India Needs Crypto Regulation

India has been planning to formulate a crypto bill to regulate the industry, for quite a long time. It was being expected that the government would present the bill in Parliament during this Monsoon Session, but the stakeholders did not have the same thought over it. 

The Indian crypto industry has always been in a state of change, initially, it had to deal with the blanket ban imposed by the central bank of India, RBI. 

In 2018, the central bank ordered the lenders to not offer their services to the crypto exchanges in the country. Due to RBI’s notification, the crypto exchanges had to stop processing the Rupee transaction from the investors. But after the Supreme Court curbed that ban, the crypto industry’s situation improved a bit.

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