Bybit Imposes 18% GST on Indian Users, Adding to Crypto Tax Burden

Bybit, a major global cryptocurrency exchange, has announced the implementation of an 18% Goods and Services Tax (GST) on all trading and service fees for its users in India. This new tax, effective from July 7, 2025, applies to a broad spectrum of services including spot and margin trading, derivatives transactions, fiat operations, crypto withdrawals, and staking services. The tax is levied directly on the fees charged for these services, impacting over 310,000 active Indian users on the Bybit platform.

The introduction of this 18% GST adds to the existing tax burden on Indian crypto users, who already face a 30% tax on profits from crypto assets and a 1% Tax Deducted at Source (TDS) on every sell transaction. This "triple tax trap" comprises capital gains tax, TDS, and GST, making trading and investing on centralized platforms increasingly unattractive. The cumulative effect of these taxes may drive users towards decentralized finance (DeFi) platforms and peer-to-peer (P2P) trading, which offer greater anonymity and control over assets, albeit with the same legal reporting requirements.

The new tax regulation has led to the discontinuation of certain services in India, such as crypto loans and the Bybit Card, limiting access to innovative financial services in the crypto space. This regulatory change could significantly impact the trading behavior of Indian users, potentially leading to a decline in domestic exchange activity. The shift towards decentralized alternatives, which are harder to monitor and regulate, poses a challenge for exchanges like Bybit, reducing their relevance in one of the world’s largest potential crypto markets.

The broader concern within the crypto industry is the need for a fairer and more innovation-friendly tax regime in India. Excessive taxation not only hurts individual investors but also stifles the entire ecosystem, making it harder for blockchain startups to attract talent or investment. India risks losing out on a technology that could be a cornerstone of its digital future, especially given the global momentum towards crypto-friendly regulation. Countries around the world are striking a balance between oversight and innovation, while India’s tax-heavy approach risks alienating both users and innovators.

However, tax avoidance or evasion is not a sustainable strategy. While DeFi might offer temporary relief for some users, long-term growth of the Indian crypto sector can only be supported through transparent, balanced, and forward-looking regulatory policies. Until such changes are made, many Indian traders may feel like they’re being punished for participating in an emerging financial revolution. As the 18% GST kicks in, India’s crypto tax burden has become one of the heaviest in the world, likely leading to a notable shift in trading behavior and an increased appetite for alternative routes that provide privacy and flexibility. The future of crypto regulation in India remains uncertain, but the community is bracing for tougher times ahead.