The Indian government is exploring ways to levy additional taxes on interest earned on cryptocurrencies through decentralized finance (DeFi) platforms located outside India, according to an Economic Times report.
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- The government wants to impose a 20% tax deducted at source (TDS) or factory-gate levy for DeFi transactions where either party resides outside India or has not furnished permanent account number (PAN Card) details, the report said.
- The government could also slap an additional 5% equalization levy tax, which is imposed on foreign-owned e-commerce companies servicing resident Indians.
- The Central Board of Direct Taxes is conferring with tax experts to figure out how these taxes can be implemented.
- Starting in April, the Indian government imposed a flat 30% tax on all cryptocurrency profits, which caused trading volumes on exchanges to decline sharply.
- A 1% factory-gate levy is due on July 1.
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