Bybit Implements 18% GST for Indian Users
Popular cryptocurrency exchange Bybit has announced that it will begin charging an 18% Goods and Services Tax (GST) to its Indian users, effective from July 7, 2025. This move is in compliance with the Indian Tax System and will apply to nearly all crypto services offered on the platform. The new taxation will encompass a wide range of activities, including staking, trading, and withdrawals, significantly impacting the cost structure for Indian participants in the digital asset market.
Scope of Taxed Services and Financial Impact
The platform has specified that these 18% GST charges will be levied in addition to existing service fees. Affected services include spot and margin trading, derivatives such as perpetual and options contracts, buying or selling cryptocurrencies with fiat currency, on-chain withdrawals, staking, crypto loans, and Bybit Pay. To illustrate the impact, if a user sells 1 Bitcoin for $100,000, incurring a typical 0.1% trading fee ($100), an additional $18 will be charged as GST on that fee, reducing the net proceeds before other taxes.
Bybit Withdraws Key Services from India
In conjunction with the new tax implementation, Bybit is also discontinuing several services for Indian users, effective from July 9, 2025. Old crypto loans will cease, with users given until July 17 to repay them. Furthermore, the Bybit Card will stop functioning from July 17, and spot grid trading bots will be deactivated. These withdrawals of services add another layer of complexity and limitation for Indian traders and investors operating on the platform.
Compounding Tax Burden on Indian Investors
The introduction of the 18% GST is the latest in a series of financial burdens for Indian crypto users, who already contend with a 30% tax on all cryptocurrency profits and a 1% Tax Deducted at Source (TDS) on every trade exceeding ₹50,000 (or even ₹10,000 in some cases). This cumulative taxation structure makes it increasingly challenging for investors to achieve favorable returns, as taxes are now being applied even before a profit is realized, creating a disincentive for participation in the market.
Regulatory Uncertainty Drives Capital Outflow
India’s cryptocurrency market operates under a tax regime that is present but a regulatory framework that remains notably weak. The absence of stable cryptocurrency laws, clear guidelines on exchange licensing, and robust investor protection regulations creates significant uncertainty. This environment, characterized by ad-hoc decisions such as app removals from digital storefronts, unexpected fines, or sudden policy shifts, has led to a substantial outflow of capital and users. Reports indicate that over 5 million Indian users have migrated to foreign exchanges, resulting in approximately $42 billion worth of trades leaving India and a potential loss of $4.2 billion in tax revenue for the government, which collected only $31 million via TDS.
India’s Lag in the Global Digital Asset Race
Compared to other nations that are actively fostering their digital asset sectors, India appears to be lagging in the global race. Countries like Thailand have implemented capital gains tax exemptions to encourage digital asset development, while places such as Dubai and Singapore are establishing themselves as innovation hubs for Web3 technologies. In contrast, India continues to focus heavily on taxing digital currencies without simultaneously developing a defined and supportive regulatory framework, hindering its competitiveness and growth in the global digital asset space.
Path Forward: Calls for Clearer Crypto Policy
The recent Bybit GST news underscores a larger issue within India’s cryptocurrency landscape. Excessive taxation, inadequate regulations, and persistent security concerns are collectively driving Indian users and exchanges away from the domestic market. For India to become a meaningful participant in the global crypto future, there is a pressing need for comprehensive and robust digital asset regulation, a reduction in the 30% profit tax, a review or reform of the 1% TDS, a better framework for eliminating illicit activities, and an operational approach that aligns with global standards for transparency and investor protection.
