Tech
India’s crypto industry gets no mention in FM’s Budget 2024 speech, no changes to taxes
The Indian cryptocurrency and Web3 industry, for days, had been adding post after post on social networking platforms urging the government to “#ReduceCryptoTax”. Despite protests, Indian Finance Minister Nirmala Sitharaman did not even mention the cryptocurrency sector in her interim budget speech presented to parliament on Thursday, February 1. This has left industry members feeling slightly disappointed and neglected. Industry players, however, remain hopeful that once India’s general elections are completed later this year, some changes can be implemented in the budget finalized by the elected government.
Sitharaman, in her hour-long speech, said no tax changes have been made as of now.
Commenting on the development, Rajagopal Menon, Vice President, WazirX, said, “We believe that cryptocurrencies and virtual digital assets can be a force multiplier in achieving ‘Viksit Bharat’ by empowering individuals at the grassroots level. Public digital infrastructure and the Prime Minister’s aspiration for ‘Anusandhan’ (research) will benefit from the incorporation of provisions for long-term funding of domestic crypto projects, as India is at a crucial stage in the revolution cryptographic. We expect these developments to be considered on the government’s agenda alongside our current calls for reducing TDS rates to 0.01% and compensating losses for traders.”
Since last week, #ReduceCryptoTax has been trending on X in India with thousands of posts calling for an overhaul of India’s cryptocurrency tax policy.
In July 2022, India imposed 1% tax deductions on every crypto transaction and also imposed a 30% tax on all cryptocurrency profits. According to industry insiders, this tax system has led to a decline in cryptocurrency-related activities in India, leading to a exodus of Web3 talents and companies towards friendlier nations. Several crypto players in India have even announced staff cuts citing a decline in users and queries related to cryptocurrencies.
For this budget, the three requests Issues related to cryptocurrencies were expected to be addressed: flexible tax slabs, reduction of TDS from 1% to 0.01% on every crypto transaction, along with the ability to carry forward losses, like stocks.
For this interim budget, however, these suggestions from the cryptocurrency industry were not addressed. The finance minister announced a proposal to support Indian youth with Rs. 1 Lakh Crore Corpus with 50 Year Interest Free Loan – which is viewed by cryptocurrency stakeholders as a step in the positive direction.
“India has over 19 million cryptocurrency investors, of which 75% are youth, thus demonstrating significant interest among young users and fueling their potential. With long-term funding options, this initiative is a strong appeal to this group to step up their efforts,” Avinash Shekhar, co-founder and CEO of Pi42, told Gadgets360.
High TDS and income tax rates continue to pose obstacles to the growth of the Indian Web3 industry. Stakeholders are now starting to wait for the final budget, which will be announced around May this year.
“Considering that it was a budget vote, we didn’t expect much movement during the session. We look forward to the changes that will be announced after the elections when the entire budget will be announced and are optimistic about the state of the industry in the country,” Dilip Chenoy, president, Bharat Web3 Association (BWA), told Gadgets360.