Budget expectations | Crypto sector hopes for revision in tax rates, parity with other assets, regulations
Crypto investors in India expect a more friendly tax regime for digital assets and parity with other assets and regulations when finance minister Nirmala Sitharaman tables the budget for FY24 in less than two months.
The crypto sector in India crashed this year with trading volumes on domestic exchanges plummeting about 90 percent as cryptocurrency prices fell and a new taxation policy was introduced for virtual digital assets (VDAs) in the FY23 budget.
Crypto was dubbed a sunrise sector in India in 2021 as prices rose and attracted users. At its peak, it was estimated that over 10 million Indians had invested almost $6 billion in crypto assets.
With the budget for FY24 coming up, investors are hoping the government will provide some relief to infuse fresh life into the struggling crypto sector.
Capital gains
Budget FY23 proposed that gains arising out of virtual digital assets or crypto assets be taxed at a flat rate of 30 percent. In addition, a 1 percent tax deducted at source (TDS) was introduced on every transfer of such assets.
“VDA exchanges in India have suffered significantly owing to the introduction of TDS at 1 percent, but Indians’ interest has remained largely unchanged,” said Sumit Gupta, cofounder of CoinDCX.
“Indian exchanges’ volumes have fallen by nearly 90 percent while Indian users’ adoption of foreign platforms has seen a massive rise.”
The high rate of TDS, which was introduced to track the movement of crypto assets, has only pushed transactions offshore.
“Not only have Indian consumers been left to rely on foreign exchanges, but their VDA activity is also not being tracked. I appreciate and support the objective of tracking VDA transactions, but this objective can be equally achieved with a lower rate of
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