Indian crypto and Web3 industry, for days, had been adding posts after posts on social networking platforms urging the government to ‘#ReduceCryptoTax’. Despite the outcry, India Finance Minister Nirmala Sitharaman did not even mention the crypto sector in the interim budget speech she presented in the parliament on Thursday, February 1. This has left members of the sector slightly disappointed and overlooked. The industry members, however, remain hopeful that after India completes its general elections later this year, some changes could be implemented in the budget finalised by the elected government.
Sitharaman, in her hour-long speech, said that no tax changes are being incorporated as for now.
Commenting on the development, Rajagopal Menon, the vice president of WazirX said, “We believe crypto and virtual digital assets can be a force multiplier in achieving ‘Viksit Bharat’ by empowering individuals at the grassroots level. Digital public infrastructure and the PM’s aspiration for ‘Anusandhan’ (research) will benefit from integrating provisions for long term financing of domestic crypto projects given how India is at a pivotal phase in the crypto revolution. We expect these developments to factor in the government’s agenda along with our existing requests for a reduction in TDS rates to 0.01 percent and offset of losses for traders.”
Since last week, #ReduceCryptoTax has been trending on X in India with thousands of posts demanding a revision in India’s crypto tax policy.
In July 2022, India levied one percent tax deductions on each crypto transaction and also enforced a 30 percent tax on all crypto profits. As per members of the industry, this taxation system has led to a drop in crypto-related activities in India leading to an exodus of Web3 talent and companies to friendlier nations. Several crypto players in India even announced staff cuts citing a drop in users and queries related to crypto.
For this budget, the three requests from the crypto were being expected to be addressed — flexible tax slabs, reduction of TDS from one percent to 0.01 percent on each crypto transaction, along with the allowance of carrying forward the losses – like stocks.
For this interim budget, however, these suggestions from the crypto sector have been left unaddressed. The finance minister did announce a proposal to support India’s youth with Rs. 1 Lakh crore corpus with 50-year interest free loan – which is being viewed by the crypto stakeholders as a step in the positive direction.
“India has over 19 million crypto investors of which 75 percent are the youth, thus depicting a significant interest among young users and fuelling their potential. With long-term financing options, this initiative is a resounding call to this cohort to scale up their endeavours,” Avinash Shekhar, Co-founder and CEO of Pi42 told Gadgets360.
High TDS and income tax rates continue to be hurdles for the growth of India’s Web3 industry. Stakeholders now start their wait for the final budget, which will be announced around May this year.
“Considering that this was a vote-on-account budget, we weren’t expecting any big movement during the session. We are eagerly anticipating changes to be announced post elections when the full budget is announced, and we are optimistic with respect to the state of the sector in the country,” Dilip Chenoy, Chairman, Bharat Web3 Association (BWA) told Gadgets360.