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India's New Crypto Tax Rate of 18% Explained in Relation to Shiba Inu

Cryptocurrency platform Bybit imposes a 18% tax on digital asset transactions for its Indian users, adhering to India's stringent regulations regarding crypto services.

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India's 18% Tax on Cryptocurrencies: Implications for Shiba Inu holders
India's 18% Tax on Cryptocurrencies: Implications for Shiba Inu holders

India's New Crypto Tax Rate of 18% Explained in Relation to Shiba Inu

New Crypto Tax in India Affects Shiba Inu (SHIB) Trading and Market Dynamics

A new tax regime for cryptocurrencies in India is set to impact the Shiba Inu (SHIB) ecosystem significantly. The new tax, which applies to all transactions involving users and merchants, includes activities carried out through Bybit Pay, fiat buy/sell services, and over-the-counter (OTC) trading.

The newly implemented 18% Goods and Services Tax (GST) will be levied in addition to India's existing crypto tax structure, which includes a 30% tax on profits and a 1% Tax Deducted at Source (TDS) on transactions. This triple taxation structure raises the cost and complexity of investing and trading, which could reduce trading volumes and liquidity within the SHIB market in India.

Bybit Fintech Limited has started applying an 18% GST on its crypto services for Indian users. This tax will apply to spot and futures trading, token swaps, withdrawals, staking, and deposits on exchanges such as Bybit. Service fees on interest payouts from native staking through On-Chain Earn will be subject to crypto tax deductions, but APR Boost rewards will remain exempt.

Indian users making crypto withdrawals will face crypto tax charges on associated withdrawal fees. Several services will no longer be available to Indian users on Bybit's platform, including legacy crypto loans, the Bybit Card, and a range of trading bots such as Spot Grid, DCA, and Futures Combo.

For the SHIB ecosystem, which relies heavily on active trading communities to sustain liquidity, price discovery, and network effects, this heightened taxation could suppress trading frequency and volumes from Indian holders and traders due to lower net returns after taxes. It could also discourage participation in staking, yield farming, and other DeFi services tied to SHIB, as these also incur GST.

The regulatory environment, with exchanges mandated to report transactions and enforce KYC/AML norms, reduces opportunities for tax avoidance and increases compliance costs. This could push users towards decentralized exchanges (DEXs) or peer-to-peer platforms that might be less regulated or taxed, although this carries compliance risks and may reduce on-chain transaction visibility.

India's decision to tax crypto services more rigorously signals growing regulatory acceptance and formalization of the crypto industry. By July 17, Indian users holding Bybit cards will no longer be able to initiate new transactions, and any outstanding crypto loans will be automatically repaid by the platform.

The new crypto tax in India could cause a shift in how Indian users engage with meme tokens and other altcoins. SHIB was the most-traded crypto in India as of a December 2024 report. The new tax could lead to reduced margins for SHIB investors and result in more cautious trading activity for SHIB users.

However, tighter regulation may filter out low-utility projects while paving the way for established ecosystems like Shiba Inu to grow more sustainably. The long-term implications of this tax could affect SHIB’s global liquidity and price stability due to reduced Indian demand.

In summary, the 18% GST on crypto services, layered on top of existing taxes, introduces a "triple tax trap" that will likely dampen SHIB trading activity within India, potentially constraining the ecosystem’s growth in one of the largest emerging crypto markets over the long term. This effect may incentivize Indian traders to reduce exposure or seek alternative assets or platforms with lower tax burdens.

[1] https://thecurrencyanalytics.com/events/india-imposes-18-gst-on-crypto-services-183957 [2] https://www.businesstoday.in/personal-finance/tax/story/cryptos-booming-in-india-but-are-you-losing-half-in-taxes-in-2025-487959-2025-08-05 [3] https://coinpedia.org/cryptocurrency-regulation/cryptocurrency-regulations-in-india/ [4] https://coingeek.com/bybit-enforces-18-percent-gst-on-indian-traders-amid-tax-crackdown/

  1. The 18% Goods and Services Tax (GST) on crypto services, coupled with existing taxes in India, forms a "triple tax trap" that could suppress SHIB trading activity within the country, potentially constraining the ecosystem's growth in one of the largest emerging crypto markets over the long term.
  2. With the increased cost and complexity of investing and trading due to taxation, Indian users may seek alternative assets or platforms with lower tax burdens or turn to decentralized exchanges (DEXs) or peer-to-peer platforms, although this could carry compliance risks and reduce on-chain transaction visibility.
  3. The new taxation could cause a shift in how Indian users engage with meme tokens like SHIB and other altcoins, leading to reduced margins for SHIB investors and more cautious trading activity for SHIB users, which might impact SHIB’s global liquidity and price stability due to reduced Indian demand.

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