The crypto industry of India stands at the threshold of a tectonic shift as Union Budget 2024 comes along. The budget is presented every year by the country's FM and spells fiscal roadmap of the government for the coming year. This year's budget is going to be of great consequence for cryptocurrency businesses and enthusiasts alike, and is expected in the last week of July.
Factors like the imposition of a 1% TDS and heavy taxation at 30% on crypto gains, which happened in February 2022, sent the crypto sector in India headlong into headwinds. With a view to revival, industry leaders seek cuts in tax rates for the stimulation of growth. They also seek the following:
Clarity: A clear definition of "virtual digital assets" to do away with ambiguity and consequently smoothens the flow of regulations.
Reduced TDS: The TDS rate has been reduced from a steep 1 percent to as low as 0.01 percent.
Loss Offsetting: Allowing crypto losses to be offset against gains, as is already provided for in-stock investments.
The government, however, is presented with a very intricate problem. It is expected to motivate the growth of the crypto sector but is also required to attain fiscal consolidation, more so when there are faltering signs in the world economy. Slowing down of economies and continuing conflicts introduce a bigger challenge in budget-making.
A positive taxation structure for cryptocurrency could have repercussions in shoring up the entire Indian economy. This can
Attract Investment: A conducive environment will attract more investors and entrepreneurs looking for opportunities in the crypto space—be it by creating jobs or innovating.
However, such rationalization might not allow cryptocurrency traders and companies to relocate to countries with lax regulations.
On the other hand, for the Indian cryptocurrency industry, Union Budget 2024 could not come at a more critical juncture. The fraternity is keen to know what the UNION Budget has in store for it, much-expecting reforms to the existing issues and unlocking complete potential of cryptocurrencies and blockchain technology in the Indian economy.
Dilip Chenoy, Chairman, Bharat Web3 Association
Bharat Web3 Association Chairman, Dilip Chenoy says there is a need to reduce taxation and bring more clarity in its regulations. He has urged the government to bring down the transaction tax from 1% to 0.01% and permit loss compensation on one VDA transaction against profit made in another.
Manhar Garegrat, Country Head India & Global Partnerships, Liminal Custody
Manhar Garegrat, Country Head India & Global Partnerships at Liminal Custody, says that the most formidable challenges are no long-term and short-term capital gains tax or very low withholding tax and the inability of investors to offset their losses against gains; and calls for rationalization of such tax components to increase the economy of India.
Shivam Thakral, CEO, BuyUcoin
According to BuyUcoin CEO Shivam Thakral, the VDA market has been through a nosedive since the levy of 1% TDS and 30% VDA gains tax, which makes him ask the government to reduce these taxes and bring out a comprehensive policy framework for the VDA market.