Can you avoid paying 30% tax by buying crypto on foreign exchanges?

How to avoid paying 30 duty on crypto income in India? This is presumably one of the biggest questions on the minds of Indian crypto investors ever since the advertisement of flat 30 duty on income from crypto and other virtual digital means (VDAs). Numerous investors are still looking for tricks to avoid duty. In hunt of saving duty, they’re falling prey to numerous so- called experts. One of similar tricks being participated by these so called experts is that you can avoid 30 duty by investing on foreign exchanges. 

Still, legal experts say you can not avoid paying 30 duty on crypto income by investing on foreign exchanges. It’s important to understand that 30 duty is on the income Indian investors may make from crypto or other VDAs. This has nothing to do with the position or origin of the exchanges. 

While major crypto exchanges are located outside India, the new 30 duty governance introduced vide Finance Act, 2022 mustn’t be confused with a duty on exchanges. It’s a duty on the income of dealer. Therefore, in my view irrespective of the position of the exchange, income would be chargeable to duty for the reason that the taxable event is the profit earned through crypto trading for assessees in India. The provision is governance neutral and would not count whether profit is earned in a original or a foreign exchange,” Sameer Jain, Managing Partner at PSL Lawyers & Solicitors, told FE Online. 

What if Indian exchanges move abroad? 

The strict crypto duty governance is forcing numerous Indian crypto exchanges and companies to move their bases to places like Dubai or Singapore as they give crypto friendly duty governance. Still, Indian investors should be apprehensive of the fact that 30 duty blazoned by the Government of India isn’t on the base of the position of the exchange. The rule is simple If you make income, you pay duty. 

 Investors must bear in mind that duty governance assessed in India isn’t grounded on the position of the crypto exchanges. Any crypto exchange furnishing service to the Indian Guests having their base outside India would not exempt the Indian Investors from duty governance as it’s irrespective of position where the crypto exchange trading is done,” Utsav Trivedi, Partner at TAS Law, said. 

Rishi Anand, Partner at DSK Legal, said it’s doubtful that the Indian investors would get any relaxation or immunity from duty counteraccusations indeed if the crypto exchange on which they’re trading moves its business outside India. 

and until farther interpretations from the government, duty would be levied on finances or any earnings repatriated to India on trade of any crypto by an Indian occupant,” Anand said. 

Not paying duty = Duty elusion 

Indeed if you buy or vend crypto on exchanges located outside India, you’re needed to report your income to the duty department. Experts say that not paying duty on any similar income would be original to duty elusion and may complicate your life due to legal hassles. 

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