As Interim Budget 2024 looms on the horizon, the Indian crypto industry is buzzing with expectations, eager to witness how the Central Government will shape the regulatory landscape for virtual digital assets (VDAs). A focal point for industry experts is the pressing need for changes in the classification and taxation of these assets.
One prominent demand from experts is the abolition of the 1% Tax Deducted at Source (TDS), a measure currently in place. Analysts argue that this TDS rate hampers investor participation by causing capital losses with each trade, discouraging potential investors from entering the crypto market.
Leading voices in the industry have articulated their hopes for Budget 2024:
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Rajagopal Menon, Vice President, WazirX
We hope that the finance ministry would reduce the Tax Deducted at Source (TDS) rate from 1% to 0.01%. Additionally, the offsetting of losses against gains made should be allowed. The underlying objective is to ensure a level playing field in the cryptocurrency space, devoid of regulatory or tax arbitrage for any participant.
Sumit Gupta, Co-founder, CoinDCX
In the midst of India's burgeoning VDA industry, the forthcoming Union Budget presents a pivotal opportunity to propel its growth. A strategic focus on significant measures, such as lowering the TDS rate from 1% to 0.01% and aligning the tax rate with the framework applicable to other assets by reducing it from 30%, would undoubtedly invigorate the sector.
Additionally, contemplating the establishment of a robust self-regulatory body for crypto and blockchain sector participants could be a game-changer.
Edul Patel, CEO of Mudrex
The Indian government's proactive stance on fostering innovation and responsible growth in the crypto industry is evident in various measures. The crypto industry in India anticipates a more balanced and forward-looking taxation system. The current 1% TDS on transactions and lack of offset are the barriers. Given India's prominent role in the grassroots adoption of crypto, it becomes imperative for the government to address these concerns.
Ashish Singhal, Co-founder & Group CEO, PeepalCo
As an FIU-registered platform compliant with India’s KYC and PMLA rules, CoinSwitch urges the Government of India to consider the following:
i) Reducing the Tax Deducted at Source (TDS) on VDAs, from 1% to 0.01%
ii) Allow offsetting and carrying forward losses from sale of VDAs
iiI) and treating income from VDAs on par with other capital assets
Rahul Pagidipati, CEO, ZebPay
Considering the positive strides made in discussions at the G20 summit, we believe that it is crucial to establish a regulatory framework. These developments, especially in reducing TDS and Capital Gains Taxes, would encourage a more inclusive participation in the crypto market.
Moreover, a supportive regulatory environment will stimulate innovation, empowering the industry to transform existing businesses through the integration of blockchain technology.
Manhar Garegrat, Country Head, India & Global Partnerships at Liminal Custody Solutions
Government should look at creating special economic zones for Web3 startups and offer tax holidays to startups during the initial years so that entrepreneurs can focus on innovation and product development without worrying about cash flows.
We call for strategic investments in research and development (R&D) initiatives specifically focused on digital asset security and compliance. This commitment will empower Indian companies to contribute significantly to global solutions and maintain India's competitive edge in the digital asset space.
Shivam Thakral, CEO of BuyUcoin
In the upcoming budget, we urge the government to replace uncertainty with clarity, not with a heavy hand but with a guiding light. A well-defined legal framework can unlock trust and fuel growth. This framework should address taxation complexities, establishing clear guidelines for income and transactions, not as barriers but stepping stones. Exchange licensing protocols should not be shackles but a badge of honor, ensuring responsible participation.
Nischal Shetty, CoFounder, Shardeum
The web3 industry eagerly looks forward to the Union Budget in anticipation of providing a new opportunity to support a thriving and responsible Web3 ecosystem in India. Web3 and blockchain, going ahead can solve many of India’s challenges in sectors such as payments, education, healthcare etc.
The industry would also like the ministry to consider rolling out specific domestic regulations for India for greater stability, and dedicate funds for indigenous blockchain projects, exemplifying real-world utility and innovation.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
