Taxing Crypto: Bybit Aligns with Indian GST Laws from July 7, 2025

In India, the regulatory framework around Virtual Digital Assets (VDAs) such as cryptocurrencies has evolved, particularly after the introduction of the Finance Act, 2022, which:
  • Imposed a 30% tax on crypto profits
  • Introduced 1% TDS on transactions above a threshold

Now, Bybit has announced GST compliance, confirming that an 18% Goods and Services Tax will be charged on service fees applicable to Indian users from July 7, 2025. This includes fees for trading, withdrawals, staking, and other services.

This move aligns Bybit with the obligations under the CGST Act, 2017, which mandates GST on taxable supplies of services provided to Indian residents, even if supplied by entities located outside India. It reflects a broader trend of increased scrutiny and regulation of the crypto industry within India’s tax framework.

What’s Changing?

Bybit will begin levying 18% Goods and Services Tax (GST) on the following services offered to Indian residents:

  • Spot & margin trading
  • Derivatives
  • Fiat transactions
  • Crypto withdrawals
  • Auto conversions and liquidations (in Unified Trading Accounts)
  • On-chain staking service fees
  • OTC and Bybit Pay transactions

This GST will be charged in addition to:

  • 30% Income Tax on crypto profits (under Income Tax Act – not GST scope)
  • 1% TDS on crypto transactions (also under Income Tax Act)

Legal GST Framework Reference:

1. Taxable Supply under GST:

As per Section 9(1) of the CGST Act, 2017:

“There shall be levied a tax called the Central Goods and Services Tax on all intra-State supplies of goods or services or both… at such rates…”

Thus, service fees charged by a Virtual Digital Asset Service Provider (VDASP) like Bybit to users in India fall under the ambit of “supply of services”.

2. Place of Supply – Section 13 of IGST Act, 2017:

If the recipient of service is in India and the supplier (Bybit) is outside India, GST is to be discharged under reverse charge mechanism (RCM) in some cases, else intermediary rules apply.

However, if Bybit is voluntarily registering or has a tax presence in India, it is liable to charge and remit GST directly.

3. Tax Rate:

No specific exemption or concessional rate applies to VDA-related services. Hence, default rate of 18% applies, as per:

  • Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017, Entry 35, covers “Other services not elsewhere classified” at 18%

4. Relevant Classification:

Under the Scheme of Classification of Services:

  • Service Code: 9984 – Telecommunications, broadcasting and information supply services
  • Or, broadly, 9997 – Other miscellaneous services (applicable to crypto exchange activities when not specifically listed)

5. Valuation & Deduction:

The GST is applied on the fee component, not on the entire transaction value (e.g., in case of BTC sale, GST applies on the service/trading fee deducted).

6. Compliance Note:

GST to be collected and remitted by Bybit where it operates in India or acts as a supplier to Indian recipients directly, under Section 24 CGST Act – compulsory registration required for persons making taxable supply from outside India to a person in India.

Discontinued Services by Bybit (Effective July 9, 2025):

  • Bybit Card (blocked by July 17)
  • Legacy crypto loans
  • Trading bots (Spot Grid, DCA, Futures Combo)
    These changes are likely part of Bybit’s compliance strategy in response to increasing Indian regulatory scrutiny.

User Impact:

Indian users of Bybit should prepare for:

  • Reduced net receipts due to GST deductions on fees
  • Higher transaction costs
  • Loss of access to some services

Conclusion:

Bybit’s move aligns with Indian GST laws requiring taxation of services consumed by Indian residents, even when supplied by foreign entities.

For precise applicability and compliance, users should consult Section 9, Section 13 of IGST Act, and Notification 11/2017-CT(Rate). For taxability under Income Tax (like 30% tax and 1% TDS), consult a qualified tax advisor.