India keeps the crypto tax rate unchanged after the 2024 budget meeting, despite calls for reform.
The crypto community pushed for a reduction in the TDS rate from 1% to 0.01%.
In the budget meeting for the fiscal year 2024-2025, India’s Finance Minister Nirmala Sitharaman upheld the existing tax regulations on cryptocurrencies, leaving the controversial tax-deducted-at-source (TDS) rate at 1% unchanged. This decision follows a significant urge from the crypto sector, which had asked for a reduction of the TDS to 0.01% and requested a more progressive taxation model.
The Indian crypto industry has presented extensive arguments to government officials, suggesting that a lowered TDS rate could stimulate market activity and investment. Additionally, the sector sought adjustments to the flat 30% tax on crypto gains, arguing for a system that allows losses to offset profits, similar to traditional investments.
Despite these requests, the budget did not make any changes to the 30% tax rate or the TDS policy. The status quo established in the 2022 budget remains unchanged. This decision aligns with a global trend toward increasing regulatory clarity for cryptocurrencies. Recent developments in the United States, such as the SEC’s approval of spot Bitcoin and Ethereum ETFs, illustrate this trend.
Indian Crypto Community’s Expectations
The Indian crypto community had hoped that the government might draw inspiration from nations like El Salvador and Switzerland. These countries have implemented more supportive and balanced regulations that have fostered growth in the crypto sector.
India reported the highest crypto adoption rate globally in 2023. Given this, the community’s expectations include rationalizing the tax framework. They also hope for a potential revision of the steep tax rate and smoother integration with the banking system.
The continuation of high taxation and the TDS rate has led to a decline in trading volumes, highlighting the industry’s call for a more favorable regulatory environment to propel innovation and job creation within the sector.
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