As India prepares for the Union Budget 2024, the crypto community awaits potential policy changes that could help the industry flourish. This year’s budget has gained additional significance in light of India’s recent G20 presidency, where the crypto sector emerged as a key topic.
Industry executives propose changes this time around with more favorable tax treatments for virtual digital assets (VDAs) to ensure the sector’s expansion and compliance with global standards.
Crypto industry hopeful
Rahul Pagidipati, CEO of ZebPay, expressed optimism about the budget, highlighting the need for a regulatory framework conducive to the crypto market.
Pagidipati said, “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 more inclusive participation in the crypto market.”
He believes that a supportive regulatory environment is crucial for stimulating innovation and integrating blockchain technology into existing businesses. This, he says, will not only create novel solutions but also ensure the sustainable growth of the crypto sector.
The executive added, “We remain hopeful for a budget that recognizes the dynamic nature of the industry and provides the necessary impetus for its continued positive trajectory in the coming year.”
Tax treatment to improve revenue
Ashish Singhal, co-founder and CEO of crypto exchange CoinSwitch, reflects on the introduction of tax provisions for VDA in Budget 2022. While the inclusion of VDAs in the Income Tax Act was a welcome move, he points out that certain provisions have had unintended consequences.
High TDS rates and the inability to offset losses have driven Indian VDA users towards non-compliant foreign exchanges, notes the exchange chief. He believes it is posing risks to their investments and potential legal issues, adding, “It also led to lesser tax revenues for the exchequer.”
CoinSwitch, which is an FIU-registered platform compliant with India’s KYC and PMLA rules, urged the government to consider reducing TDS on VDAs from 1% to 0.01%. In addition, the exchange called for allowing the offsetting and carrying forward of VDA sale losses, and aligning VDA income treatment with other capital assets.
Singhal said, “The Government of India has shown commendable leadership at the G20 to arrive at a roadmap for a global crypto framework and has implemented domestic regulatory frameworks such as anti-money laundering that are in line with global standards.”
Further adding that reconsidering its tax treatment will reduce tax arbitrage, the flight of capital, consumers, investments, and talent.
Also Read: Union Budget 2024: Crypto Expectations And Announcements
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