India's Crypto Tax Maze: GST, Bybit, and the DeFi Escape?

Decoding India's complex crypto tax landscape: the new 18% GST on Bybit, its impact on traders, and the potential shift to DeFi platforms.

India's crypto landscape just got a whole lot taxier. With the introduction of an 18% Goods and Services Tax (GST) on crypto services via platforms like Bybit, Indian crypto enthusiasts are facing a triple whammy of taxes. Is this the tipping point that sends them fleeing to the decentralized world of DeFi? Let's dive in.

The Triple Tax Threat: A Crypto Tax Breakdown

As of July 7, 2025, Bybit, a popular crypto exchange, will be levying an 18% GST on nearly all its services for Indian users. This comes on top of the existing:

• 30% tax on crypto profits.
• 1% Tax Deducted at Source (TDS) on every sell transaction.

This combination, dubbed the "triple tax trap" by some, makes India one of the highest-taxing nations for crypto globally. Think about it: if you make a profit on a trade, nearly half of it could go to taxes! Ouch.

What's Getting Taxed?

According to crypto influencer Keyur Rohit, the 18% GST applies to a broad spectrum of services on Bybit, including:

• Spot and futures trading fees
• Copy and bot trading
• Staking rewards
• Withdrawals
• Card payments
• Token swaps
• Yield earnings
• Deposits via card or bank

Furthermore, Bybit is discontinuing crypto loans and the Bybit Card for Indian users. It's a pretty comprehensive sweep.

DeFi: The Potential Escape Hatch?

The big question is: where do Indian crypto traders go from here? One potential answer is Decentralized Finance (DeFi). DeFi platforms offer a way to trade and invest in crypto without the same level of regulation and taxation as centralized exchanges. The hope is that this move could discourage trading and encourage a shift to DeFi or peer-to-peer platforms.

However, it's important to note that avoiding tax isn't advisable, and DeFi isn't a complete safe haven. Indian authorities are likely to keep a close eye on DeFi activity, and new regulations could eventually extend to that space as well.

The Bigger Picture: Innovation vs. Regulation

India's approach to crypto has always been cautious, even restrictive. The government's intention is to integrate cryptocurrencies into its financial legal framework. While regulation is necessary to protect investors and prevent illicit activities, over-taxing and over-regulating could stifle innovation and drive users underground.

A more balanced approach is needed – one that supports innovation without stifling users. The UK, for example, is also tightening crypto tax oversight but with the aim of generating revenue for public services. The key is to find a sweet spot where the government can collect revenue without crippling the industry.

My Two Satoshis: A Call for Clarity

While I understand the need for regulation, India's current crypto tax regime feels a bit like using a sledgehammer to crack a nut. It risks pushing legitimate businesses and users away, hindering the growth of a promising sector. A clear, fair, and innovation-friendly tax framework is essential for India to truly benefit from the crypto revolution.

The Bottom Line

India's crypto tax situation is complex and evolving. The 18% GST on Bybit is just the latest twist in the tale. Whether it leads to a mass exodus to DeFi or prompts a re-evaluation of the country's crypto policies remains to be seen. One thing's for sure: it's going to be an interesting ride. So buckle up, crypto comrades, and stay informed!