Indian Crypto Investors May Not Be Subject to Equalization Tax

India may not impose a 2% equalization tax on cryptocurrency investors. Responding to a query from the deputy chief minister of the eastern state of Bihar about data on the country’s cryptocurrency exchanges and their investors, Finance Minister Nirmala Sitharaman said the current government does not collect any such information.

Earlier reports said the tax department was analyzing whether equalization taxation would apply to purchases of digital assets from overseas exchanges. This comes as the country expanded the scope of taxation in 2020 to cover ‘e-commerce supplies or services.’

This expands the scope beyond online advertising and does not exempt business-to-customer transactions.

However, according to Sitharaman, the equalization taxation of cryptocurrency exchanges may not be applicable to investors.

Furthermore, Sitharaman revealed that the Ministry of Finance has not received any information about these exchanges being involved in drug trafficking or other forms of money laundering in the country. The Enforcement Directorate [ED] recently issued a notice to WazirX, one of the country’s well-known exchanges, for violating the Foreign Exchange Management Act.