Budget 2023: Crypto Industry Seeks Tax Relief, Clear Regulations

SUMMARY

Reduction in TDS on crypto transaction to 0.01%-0.1% from 1% and allowing offsetting losses in one cryptocurrency against profit in other are the key demands of the industry

Crypto investments should be treated like any other investment and there should be a rational tax structure similar to the one for stocks and mutual funds, say crypto stakeholders

The government is not comfortable with cryptocurrencies and it is unlikely to change the existing tax policy, believes former finance secretary Subhash Chandra Garg

The Indian cryptocurrency industry is expecting some key announcements, including reduction in crypto tax rates, from Finance Minister Nirmala Sitharaman when she presents Union Budget 2023-24 on February 1, 2023.“The idea of the government was very simple. They wanted to know how many crypto transactions are happening because they felt that a lot of people were not showing it in their returns. This is why they had this 1% TDS imposed on the seller. While most of the Indian exchanges implemented this since the rule came into implementation from July 1, foreign exchanges didn’t as they are out of Indian jurisdiction…we have to remember that crypto is truly global,” explained Rajgopal Menon, VP, WazirX.Sumit Gupta, founder and CEO of CoinDCX, said, “Notably, through our representation for the upcoming Union Budget 2023–2024, we have suggested that the rate of TDS be brought down to 0.01%. This lower rate will help Indian VDA businesses offer competitive prices to Indian VDA users and protect them from exposure to unregulated foreign exchanges.”“India has a very strong IT infrastructure which can provide a strong foundation for the Web3 industry to flourish. We urge the government to fast-track the crypto bill which has been pending for years. Although the tax part has been addressed, Web3, crypto assets, NFTs, and the Metaverse require a separate bill for other regulatory matters,” Tarusha Mittal, COO and cofounder of UniFarm and Dapps, said.

In her Budget speech last year, Sitharaman introduced crypto taxation for the first time by bringing private cryptocurrencies under virtual digital assets (VDAs). According to the crypto taxation policy under the newly introduced Section 115BBH of the Income Tax Act: