Due to no clear regulatory guidelines, foreign crypto exchanges do not have a defined tax bracket, however, The Indian tax authority is planning to impose an 18% additional tax on them.
According to a statement in The Economic Times, foreign crypto exchanges who provide services to Indian customers may be required to pay an extra tax.
The Indian tax administration is investigating which tax band several overseas bitcoin exchanges may fall into in India, based on the services they provide.
At the moment, foreign exchange companies do not pay any taxes to the Indian government.
Even Indian exchanges do not fall into any certain tax band that they must pay due to the lack of any serious guidelines and regulatory guidelines.
A majority of the cryptocurrency exchanges operating in the country follow the self-regulatory process and pay 18% tax on their profits and margins.
As shown in a report in the Economic Times, the Indian tax administration is considering bringing foreign exchange services under the umbrella of online information database access and retrieval (OIDAR) services.
According to OIDAR laws, every firm providing data or digital services to Indians must pay a tax based on their tax bracket.
The lack of regulatory approval from the government is cited by Indian banks as a major reason for their unwillingness to cooperate.
The Indian Central Bank (RBI) has likewise taken a cautious approach to cryptocurrency, describing it as a volatile and speculative asset.
The RBI banking ban, which was enforced in 2018 and was eventually overturned by the Supreme Court in 2020, had little to no effect on Indian banks.
They refused to execute cryptocurrency transactions and frequently warned consumers about the overturned circular from 2018.
The crypto community in India is counting on a crypto bill to be introduced during the forthcoming Monsoon legislative session.
Because there are no regulatory rules for crypto firms and Indian banks are increasingly refusing to offer crypto services, a large portion of the crypto industry has turned to overseas exchanges like Binance.