Following the Supreme Court’s reversal of the Reserve Bank of India’s ban on financial institutions providing banking services to crypto firms, the country’s digital asset exchanges are seeking clarity on their taxation obligations.
On May 4, India Times reported that several of India’s crypto exchanges collectively penned a letter to the RBI claiming that the current absence of regulatory clarity has led to banks continuing to deny services to exchanges dealing with crypto assets.
The report notes that the exchanges have also reached out to India’s high court regarding the matter.
Indian crypto exchanges want GST clarification
In particular, the exchanges want to know if their operations will be classified as dealing with goods, currencies, commodities, or services in order to ascertain whether they are subject to the country’s Goods and Services Tax (GST).
Praveenkumar Vijayakumar, the chief executive of crypto exchange Belfrics Global, stated: “If the digital assets are not exempted from GST, the digital currency exchanges in India are going to have a standoff with the tax authority.”
“In the wake of the recent Supreme Court ruling, we have also approached the RBI for clarity on this, as if we pay GST on the whole transaction, then most platforms would not be able to survive,” he added.
Sidharth Sogani, the CEO of digital asset research firm Credbaco Global, asserted that “the RBI was supposed to issue a new circular directing the banks to start banking relationships again with cryptocurrency exchanges and businesses” after the Supreme Court overturned the central bank’s ban.
However, Sogani claims that many banks are denying having received any notification from the RBI when approached by crypto exchanges looking to do business.
India’s population under-represented in crypto markets
In a recent interview with Inc42, the co-founder and CEO of top Indian crypto exchange Unocoin, Sathvik Vishwanath, said that India’s population is significantly underrepresented in the crypto-asset markets.
Despite representing 17% of the global population, Vishwanath estimates that Indian crypto trade comprises just 1% of the total trade activity, predicting that it will take at least 12 to 24 months for India to catch up with the rest of the world with regards to digital asset adoption.
Vishwanath also notes that the economic slowdown resulting from the coronavirus pandemic has stifled the industry’s momentum following the RBI ban’s repeal.