Coinspeaker India’s Budget 2024 Likely to Maintain 1% Crypto TDS Despite Industry Pleas
Indian crypto market is unlikely to see relief from a controversial tax policy in the upcoming budget despite the recent surge in Bitcoin price and growing calls for reform. Experts predict that Finance Minister Nirmala Sitharaman will maintain the 1% tax-deducted-at-source (TDS) on crypto transactions in her budget, which will be revealed on Tuesday. The industry has faced challenges from this policy since its implementation two years ago.
BWA Advocates for Crypto Reforms
This year’s budget holds particular significance because Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) secured a third term through a coalition government. The need to appease alliance partners demanding over $15 billion likely takes precedence over the crypto industry’s requests.
The 1% TDS policy has been a major point of contention for the Bharat Web3 Association (BWA), the industry’s leading voice. The BWA has consistently urged the government to slash the tax to 0.01%, arguing that the current rate disadvantages India.
The association points to capital flight, with investors transferring their transactions to overseas exchanges and Decentralized Exchanges (DEXs) to avoid the high tax, ultimately leading to a loss in potential revenue for the government.
Although the TDS reduction appears unlikely in the immediate future, the BWA remains hopeful for progress on other fronts. The association advocates for a tiered tax structure that replaces the current flat 30% tax on crypto gains with a progressive system. Additionally, the BWA pushes for allowing investors to offset losses against gains, a standard practice in other asset classes.
Crypto Leaders Emphasize on Multi-Agency Regulation! As India’s Web3 landscape evolves, the Bharat Web3 Association (BWA) joins our member firms to push for multi-agency regulation. The complex nature of crypto assets demands a nuanced approach that single-regulator legislation
— Bharat Web3 Association (@BWA_Ind) July 4, 2024
The lack of comprehensive crypto regulation is another area of concern for the industry. Senior Finance Ministry officials have hinted at upcoming legislation, but details remain scarce. The BWA views clear regulatory guidelines as crucial for fostering a healthy crypto ecosystem in India.
Government Focus Shifts to Crypto Regulation
A glimmer of hope emerges from the BWA being invited to pre-budget consultations with the ministry, unlike previous years. However, the recent $230 million hack of WazirX, a prominent Indian crypto exchange, might have pushed crypto further down the government’s priority list.
“The government seems more focused on stringent regulation at this point,” says Rajat Mittal, a Supreme Court crypto tax counsel. “While the high TDS might be driving investors away, a rate reduction seems unlikely in the near future.”
The upcoming budget announcement might not deliver the big win the crypto industry craves, but the BWA’s inclusion in pre-budget talks signifies a potential shift towards greater dialogue.
next
India’s Budget 2024 Likely to Maintain 1% Crypto TDS Despite Industry Pleas
