Overseas cryptocurrency exchanges like Binance that provide services to customers in India may be subject to GST, a report on Economic Times said. The indirect tax department is reportedly examining whether these exchanges would be liable to GST under the IGST Act, 2017 for the category Online Information Database Access and Retrieval (OIDAR) service. Receipt of OIDAR services by a registered entity in India would be taxable under reverse charge and the place of supply is India. OIDAR services include website supply, web-hosting, distance maintenance of programs and equipment, supply of images, text, and information, and making available databases.
For supply of OIDAR services to an unregistered entity (individual), foreign supplier is liable for paying integrated GST tax on such supply of services. If treated as an OIDAR service, the foreign crypto exchanges would be required to take a single registration in Form GST REG-10 with the Principal Commissioner of Central Tax, Bengaluru West who has been designated for granting registration in such cases.
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Last month, we reported on the direct tax department reportedly examining the imposition of equalisation levy on foreign crypto exchanges. Indian exchanges already charge 18% GST on the margins or commissions they charge for transactions. In absence of clear guidance, it is still unclear whether cryptocurrencies are a financial asset, security, or currency. Indian exchanges currently charge GST under the same slab charged by Indian stock brokers. As per reports, the Indian government is contemplating to recognise crypto currency as an asset class.
Bringing foreign exchanges under OIDAR services would also increase compliance requirements to these exchanges. Under Rule 64 of CGST Rules, 2017, every registered person providing OIDAR services from a place outside India to an unregistered person in India is required to file a monthly return in FORM GSTR-5A on or before the twentieth day of the month succeeding the calendar month.