/ Web3 × FEMA × Offshore Specialist · Updated 2026-10-22

CA for Web3 Crypto FEMA ODI + Dubai Structuring India, Section 115BBH navigation + offshore structuring.

Indian Web3 / crypto startup faces Section 115BBH 30% flat tax (no loss offset) + Section 194S 1% TDS - plus often needs offshore HQ (Dubai VARA, Singapore VCC, Delaware) for operational / regulatory reasons. FEMA ODI compliance on Indian side + offshore structuring + Section 2(22)(e) deemed dividend risk management are the critical specialties. Here's the integrated framework.

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Written by CA Durgesh Chavda

Chartered Accountant (ICAI) · Founder, Bharat Quantum Prospera · US incorporation, India-US DTAA, FEMA ODI, NRI taxation, cross-border structuring · LinkedIn

/ The crypto tax + regulatory stack

Four layers.

Section 115BBH 30% VDA tax: flat rate on gain from any Virtual Digital Asset. No loss offset (loss cannot be set off against other VDA gain or any other income). Only deduction: cost of acquisition.
Section 194S 1% TDS on crypto transfer: paid by exchange / crypto service provider on sale consideration above INR 10,000 per transaction. Form 26QE / 26QF reporting.
Offshore structuring: many Indian Web3 startups structure HQ in Dubai (VARA licensed), Singapore (VCC), Delaware C-Corp. Rationale: regulatory clarity, exchange licence availability, LP-friendly tax, international LP access.
FEMA ODI compliance: Indian founder's investment in offshore crypto HQ requires Form ODI Part I filing + annual Form ODI Part II (APR) + specific restrictions on crypto-adjacent businesses under FEMA.
GST 18% on crypto services: trading fees, exchange services, staking rewards.

/ Dubai VARA structuring

The current favourite.

Dubai VARA (Virtual Asset Regulatory Authority) licensed entities offer:

Regulatory clarity for crypto exchange + custody + advisory + token issuance.
UAE 9% corporate tax (post 2024 CT regime).
Favourable India-UAE DTAA (10% dividend withholding).
Growing crypto hub ecosystem.
Workaround for India's Section 115BBH friction.

Structure: Dubai VARA entity as main operating entity + Indian subsidiary for Indian operations + Indian founder's equity in Dubai entity.

/ FEMA + Section 2(22)(e) risks

The traps.

FEMA ODI compliance: Indian investment in overseas entity (including through founder's personal LRS or Indian company's ODI route) requires regulatory compliance. Form ODI Part I + APR annual.
Section 2(22)(e) deemed dividend: if offshore entity gives loan / advance to Indian related party (common round-tripping risk), deemed dividend treatment.
Related party transactions: Section 92 TP compliance if Indian subsidiary of foreign crypto HQ.
Pre-GAAR / Principal Purpose Test (PPT): if offshore structure is primarily tax-driven, treaty / FEMA benefits may be denied.
Press Note 3 beneficial ownership: investment from land-bordering country requires prior approval.

/ Our scope for Web3 / crypto

Complete offering.

Section 115BBH + Section 194S compliance for Indian activities.
Offshore HQ decision: Dubai VARA vs Singapore VCC vs Delaware C-Corp.
FEMA ODI compliance (Form ODI Part I + APR annual).
Section 2(22)(e) deemed dividend risk management.
Transfer pricing for Indian subsidiary of offshore crypto HQ.
GST 18% on crypto services + ITC optimisation.
Multi-exchange transaction reconciliation + ITR Schedule VDA.
ESOP structuring with VDA-adjacent complications.
CARF (Crypto Asset Reporting Framework) readiness.

Last updated: 2026-10-22.

/ Ready when you are

Indian Web3 founder with offshore structure?

Section 115BBH + FEMA ODI + Dubai VARA / Singapore VCC + Section 2(22)(e). BQP integrated engagement. Scope-based.

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FAQ

Common questions, answered.

Why do Indian Web3 startups structure offshore?

Section 115BBH 30% + Section 194S 1% TDS + no loss offset make Indian crypto operations friction-heavy. Offshore HQ in Dubai (VARA licensed), Singapore (VCC), Delaware (C-Corp) offers: regulatory clarity, lower / simpler tax, LP-friendly structure for VC funding, international market access. Standard structure for Series A+ crypto startups.

What's Dubai VARA licensing?

Virtual Asset Regulatory Authority (Dubai, UAE) - comprehensive crypto regulatory framework (2022 onwards). Covers exchange, custody, broker-dealer, advisory, token issuer activities. Licensed entities operate under clear regulatory regime vs India's current uncertainty. UAE 9% corporate tax + favourable DTAA. 6-12 month licensing timeline.

Does Section 115BBH apply if I hold crypto in offshore wallet?

If Indian tax resident (Section 6), yes - global crypto income taxable in India under 115BBH 30%. Non-resident status (NRI) exempts from Section 115BBH for offshore holdings. For Indian founder of offshore crypto HQ: Indian compensation + capital gain on Indian activity taxable; offshore gain subject to Indian tax if resident.

How does Section 194S TDS work for Indian exchange?

Indian crypto exchange / service provider must deduct 1% TDS on sale consideration above INR 10,000 per transaction. Form 26QE / 26QF reporting. TDS credit to seller via Form 26AS. Multi-exchange activity: aggregate TDS reconciliation needed in ITR Schedule VDA.

What's CARF for Indian crypto?

Crypto Asset Reporting Framework - OECD-led global automatic exchange of information for crypto. India implementation pending (likely 2027). Impact: foreign crypto exchanges will auto-share Indian user transaction data with Indian tax authority (similar to CRS for banking). Compliance preparation: ITR Schedule VDA accuracy + transaction history preservation.

Does BQP handle Indian + Dubai + Singapore Web3 structuring?

Yes - specialist crypto practice. Indian 115BBH + 194S compliance, Dubai VARA entity structuring + application, Singapore VCC AIF structuring, Delaware C-Corp HQ, FEMA ODI, Section 2(22)(e) deemed dividend management, transfer pricing, CARF readiness. Co-ordinated with Dubai regulatory counsel + Singapore + Delaware legal partners. WhatsApp +91 78018 87130.