Regulation
Crypto News: What Does Indian Crypto Industry Expect From Budget 2024? Here’s The Wishlist
As the newly elected NDA government prepares to present its full budget for the financial year 2024-25, all eyes are on Finance Minister Nirmala Sitharaman. Among the many sectors eagerly awaiting the announcements, the cryptocurrency industry has high hopes for favorable reforms that could significantly impact its growth and regulatory landscape. Industry experts have laid out a clear wish list ahead of the budget, focusing on critical issues such as high transaction tax and inability to offset losses with gains. These concerns have been major deterrents for investors and innovators in the cryptocurrency space. In the meantime, the cryptocurrency community is optimistic that the government will address these challenges to create a more conducive environment for the sector.
Industry leaders have outlined their expectations for Budget 2024:
Edul Patel, CEO of Mudrex
We expect the new government to address critical challenges facing crypto investors in India. Specifically, the 1% TDS on every transaction and the current inability to offset losses with gains are significant deterrents for investors. Addressing these issues could foster a more conducive environment, encouraging innovation and growth within the sector.
Dilip Chenoy, President, Bharat Web3 Association
The Indian Finance Ministry invited BWA for pre-budget consultations. We presented our demands and expectations, including a key demand of reducing the transaction tax from its current rate of 1% to 0.01%.
We have also requested the Ministry of Finance to allow the offsetting of losses on a VDA transaction with profits from other transactions. We have advocated that the government consider income from the transfer of assets as equivalent to other sources of income.
We urge the government to implement clear and industry-friendly policies. regulationsand tax reforms that allow this emerging sector to thrive and create new opportunities and sources of revenueManhar Garegrat, Country Manager India and Global Partnerships, Liminal Custody
For us at Liminal Custody, it is important that the upcoming budget addresses key issues of India. virtual digital asset (VDA) – primarily around taxation. In several other jurisdictions in which we operate as licensed and regulated custody providers, we see regulators encouraging the growth of this nascent sector and we believe the Indian economy can benefit enormously from streamlining Taxation for digital assets.
Shivam Thakral, CEO of BuyUcoin
We hope that the upcoming budget will address our grievances and reduce capital gains taxes and capital gains taxes on VDA transactions to reasonable levels, thereby enabling us to operate and thrive on a level playing field. We strongly advocate for a comprehensive regulatory framework for the virtual digital asset market in India. This framework should be applicable to both Indian and offshore companies and should ensure a level playing field for all, promoting fair and unhindered operation.
Rajagopal Menon, Vice President, WazirX
THE crypto industry hopes the FM will remove or reduce the TDS by 1%, allow set-offs for losses and tax capital gains according to income brackets.
With India being a signatory to the G20 Ministerial Declaration, we can anticipate regulation of cryptocurrencies by 2025. We hope that the regulation will be in the Goldilocks zone – neither too strict nor too lenient, thereby fostering an enabling environment for the industry.
Sumit Gupta, Co-Founder of CoinDCX
CoinDCX submitted its demands and recommendations to the Government of India and was also part of the BWA delegation that met Finance Ministry officials as part of the pre-budget consultations. Our key demands include:
To ensure a level playing field for the Indian VDA industry vis-à-vis its offshore counterparts, we urge the government to expand the scope of the TDS mandate to explicitly include offshore platforms.
Further, we advocate for reduction in TDS rate under Section 194S(1) from 1% to 0.01%, emphasizing the need for a favourable fiscal environment to boost industry development.
In pursuit of fair taxation, we propose an amendment to Article 115BBH to reduce the tax rate by 30%, to the same level as assets in other sectors.
Further, we recommend reviewing the threshold limit for tax deduction under Section 194S, suggesting an increase from INR 10,000/INR 50,000 to INR 5,00,000, in line with the provisions of Section 194-O of the Act.
Ashish Singhal, Co-Founder of CoinSwitch
We urge the government to create a regulatory and fiscal environment that is conducive to the growth of the digital economy and innovation. Here are some of our budget recommendations:
Reduce the TDS rate on transfer of VDA from 1% to 0.01% under Section 194S to bring majority of VDA transactions under the tax monitoring mechanism, improve tax compliance and prevent capital flight.
Allow for loss offsetting as in other sectors to encourage responsible business practices and reduce the risk of tax evasion.
In addition, the Rs 10,000/50,000 threshold may also be revised. Most of the crypto sellers (mostly individuals) fall into the low-income bracket. Increasing the threshold will reduce the administrative burden on the tax department in processing refunds.
(Disclaimer(The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of The Economic Times.)
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(Originally published July 18, 2024)