Indian government does not have conclusive data about the country’s crypto exchanges and transactions in the country. It also clarified equalization levy issue on crypto
The Union Minister of Finance, Nirmala Sitharaman has disclosed that the Indian government does not have any conclusive data on how many cryptocurrency exchanges are operating in the country and the number of users of these exchanges.
Also, India might not impose an Equalization Levy, also known as applies Google tax, to e-commerce operators, not investors.
The Absence of Data
On July 27, the Union Minister filed a written reply tabled in Rajya Sabha to a query from a fellow lawmaker about the number of cryptocurrency exchanges operating in India and their users which reads, “This information is not collected by the Government.”
WazirX CEO had earlier shared some data on Twitter.
In response to another query on “whether it is a fact that narcotic drug trafficking and money laundering are being committed through many of the cryptocurrency exchanges”, she said, “No such information has come to the notice of the Government.”
But the law enforcement agency, Enforcement Directorate (ED) is making efforts to curb money laundering by serving notices to and ensuring compliance from all cryptocurrency exchanges. ED had earlier served a notice to WazirX of allegedly violating provisions of the Foreign Exchange Management Act (FEMA) for cryptocurrency deals worth INR 2,790.74 crores.
Recently, Hyderabad police arrested an individual for allegedly duping people of INR 3.14 crore. The investigators said that the person allegedly used WazirX to befriend the victims. Meanwhile, WazirX has denied any involvement as per a report from Medianama.
Equalization Levy is a tax borne by entities with a permanent establishment outside India that earn from Indian residents. It could be levied either directly or indirectly. The ultimate taxpayer is determined after examination under the Significant Economic Presence (SEP) clause defined in the Income-Tax Act.
The tax had originally been imposed on foreign companies like Amazon, Facebook, etc. earning revenues from India for advertising online.
Earlier reports were indicating that there could be a 2% levy on foreign crypto exchanges.
She has clarified in the same reply by stating: “Equalisation levy is imposed on e-commerce operator, not on the investor.”
The government had earlier expanded the scope of Equalization Levy to include any purchase by an Indian or India-based entity through an overseas platform.
The crypto industry in India is flourishing at a very fast pace. Favourable taxation and regulatory laws can make the country a global or regional hub given the abundance high skilled talent.