{"id":1956,"date":"2026-05-18T15:19:28","date_gmt":"2026-05-18T09:49:28","guid":{"rendered":"https:\/\/raaas.com\/blog\/?p=1956"},"modified":"2026-05-18T15:19:28","modified_gmt":"2026-05-18T09:49:28","slug":"gst-on-crypto-3-things-indian-investors-frequently-get-wrong","status":"publish","type":"post","link":"https:\/\/raaas.com\/blog\/gst-on-crypto-3-things-indian-investors-frequently-get-wrong\/","title":{"rendered":"GST on Crypto: 3 Things Indian Investors Frequently Get Wrong"},"content":{"rendered":"

There have been many changes in the landscape of Virtual Digital Assets (VDAs) in India over recent years. As most of the news continues to focus on the 30% flat income tax as well as the 1% Tax Deducted at Source (TDS), there is a hidden and rather complex monster that is not getting enough coverage:<\/span> the Goods and Services Tax (GST)<\/a>.<\/b><\/p>\n

To the everyday Indian cryptocurrency trader, GST is a forgotten term; it is something that they think the exchange will take care of. But, as the Directorate General of GST Intelligence (DGGI) steps up their investigations against crypto exchanges and affluent people, being unaware of GST rules can be dangerous.<\/span><\/p>\n

Ruchi Anand & Associates<\/b> is an expert in handling the maze of taxes in India. This blog helps us understand the three biggest myths regarding the GST levy applicable to cryptocurrencies among most Indian investors. It also offers an elaboration on how to be GST-compliant in crypto transactions.<\/span><\/p>\n

1. The Transaction vs. Service Confusion: Is Crypto a Good or a Service?<\/b><\/h3>\n

\"The<\/a><\/p>\n

The main problem that investors make is thinking that because they pay 30% of Income Tax on the profit, there won\u2019t be any GST levied on the<\/span> trading.<\/b><\/p>\n

The Misconception:<\/b><\/h5>\n

Investors have a misconception that acquiring Bitcoin is akin to acquiring stocks. Since securities do not fall within the ambit of “Goods” and “Services,” investors assume cryptocurrencies will be exempt.<\/span><\/p>\n

The Reality:<\/b><\/h5>\n

Under the Indian law, the classification of crypto assets as per now is <\/span>Virtual Digital Assets (VDAs). <\/b>Unlike shares or any other traditional asset, for instance, fiat money, the facilitation of trading these crypto assets is considered a taxable service under GST.<\/span><\/p>\n

GST in India is imposed only on the <\/span>service fee\/commission<\/b> levied by exchanges (generally 18%). Nevertheless, now it is discussed by the GST Council members whether the full amount of trading should be subjected to taxes or whether only the margin would have to be taxed.<\/span><\/p>\n

As an ordinary investor, you will have to pay 18% GST on the trade as a trading fee tax. Nevertheless, if you are a trader who trades cryptocurrencies as a business \u2013 an <\/span>arbitrageur<\/b> or a<\/span> High-Frequency Trader<\/b>, then the uncertainty about the nature of crypto \u2013 good or service \u2013 might complicate your ITC utilization.<\/span><\/p>\n

2. The Global Exchange Trap: “Offshore Means No GST”<\/b><\/h3>\n

Investors in large numbers have transferred their investments overseas into foreign exchanges such as Binance, Bybit, or KuCoin following the introduction of the 1% TDS on transactions post-trade in India in a bid to escape from taxes levied by the Indian government.<\/span><\/p>\n

The Misconception:<\/b><\/h5>\n

Since the trading takes place in Seychelles\/BVI, one would think there is no requirement for the payment of GST.<\/span><\/p>\n

The Reality:<\/b><\/h5>\n

\"OIDAR<\/a><\/p>\n

As per the provisions of the GST Act, specifically the <\/span>OIDAR (Online Information Database Access and Retrieval)<\/b> services<\/b>, GST needs to be levied by the foreign service provider to a non-registered individual in India.<\/span><\/p>\n

Moreover, if an Indian resident uses the services provided by an overseas organization, then Place of Supply will be regarded as India. When you are utilizing an overseas exchange for your business requirements, there are chances that you may have to pay GST under the <\/span>Reverse Charge Mechanism (RCM)<\/b>. In simple words, the obligation of paying GST becomes yours rather than the exchange’s.<\/span><\/p>\n

Not considering GST in the payment of money in foreign transactions can lead to a \u201cNotice of Inquiry\u201d issued by the DGGI.<\/span><\/p>\n

3. Misunderstanding GST on Mining and Staking<\/b><\/h3>\n

\"Misunderstanding<\/a><\/p>\n

Mining and Staking form the core of the decentralised system, but they are nothing less than a horror story when it comes to GST obligations.<\/span><\/p>\n

The Misconception:<\/b><\/h5>\n

The misconception among investors is that minting or earning rewards from any decentralised system is a capital gain which is subject to Income Tax alone.<\/span><\/p>\n

The Reality:<\/b><\/h5>\n

The GST department considers mining a service rendered for the blockchain network.<\/span><\/p>\n