Is it possible to avoid the 30% crypto tax by purchasing tokens on a foreign exchange

Is it possible to avoid the 30% crypto tax by purchasing tokens on a foreign exchange? Here’s what some legal experts have to say about it.

How can you avoid paying 30% tax on cryptocurrency revenue in India? This is perhaps one of the most pressing concerns for Indian crypto investors since the announcement of a flat 30% tax on earnings from crypto and other virtual digital assets (VDAs). Many investors are still looking for ways to avoid paying taxes. They are falling prey to numerous so-called experts in their effort to save taxes. One of the so-called experts’ tactics is that you can avoid paying 30% tax by investing in foreign currencies.

However, legal experts believe that investing in international exchanges would not allow you to avoid paying 30% tax on crypto revenue. It is critical to realize that a 30% according to crypto tax India, is levied on any profits made by Indian investors from bitcoin or other VDAs. This has nothing to do with the exchanges’ location or origin. While major crypto exchanges are located outside of India, the new 30% tax regime enacted by the Finance Act of 2022 should not be misconstrued with an exchange tax. It is a tax on a trader’s income. Thus, regardless of the location of the exchange, income would be taxable in my opinion because the taxable event is the profit earned through crypto trading for assessees in India. The provision is jurisdiction-neutral, and it makes no difference whether profit is earned in a domestic or foreign exchange.

 What if Indian exchanges go global?

The severe crypto tax policy is causing many Indian crypto exchanges and enterprises to relocate their operations to areas like Dubai or Singapore, which have more favorable crypto tax regimes. However, Indian investors should be informed that the 30% tax declared by the Government of India is not based on the exchange’s location. The rule is simple: If you earn money, you must pay taxes.

Investors should keep in mind that the tax structure in India is not based on the location of crypto exchanges. Any crypto exchange providing services to Indian customers with a basis outside of India would not shield Indian investors from the tax regime since the tax regime applies regardless of where the crypto exchange trading takes place.

Rishi Anand, Partner at DSK Legal, believes it is doubtful that Indian investors will receive any tax relief or exemptions even if the crypto exchange on which they trade relocates its operations outside of India.

It is incorrect to claim that anyone may escape the 30% tax by trading on international exchanges using cryptocurrency. According to concerned departments/authorities, this is an attempt at tax avoidance. The aforementioned transaction will fall under Section 115AD of the Income Tax Act of 1961, depending on the facts of each instance; therefore, it is better to be cautious than to be sorry afterwards.

A bitcoin portfolio tracker like BINOCS is a great way to keep track of your assets. It can help you manage your crypto exchange tax and track your investment goals and provide you with pertinent market information. If you’re interested in crypto portfolio tracking, go to the website right now.

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