cryptocurrencies: Great Expectations: What the Indian crypto industry is hoping for in Budget 2023

The crypto industry has great expectations from the upcoming Union Budget of 2023. The Industry is hoping that FM Nirmala Sitraman will bring a number of changes, specifically how Virtual Digital Assets (VDAs) are classified and taxed. The 2 major demands are:

1. The 1% tax deducted at source (TDS) on sale transactions of Crypto assets should be abolished. This tax causes investors to lose capital with each trade and discourages prospective investors from participating in this market, resulting in a loss of capital investment in crypto assets.

2. The current tax architecture should be changed to allow for set-off and carry forward of losses in VDAs similar to equity shares/derivatives. The 30% threshold was set in response to comparisons of digital assets with highly speculative avenues such as gambling, betting, and so on. However, VDAs are similar to securities trading and should, therefore, be treated similarly with respect to taxation and setoff benefits.

According to Delhi-based think tank The Esya Centre, the 30% tax and 1% TDS led to a cumulative trade volume worth Rs 32,000 crore shifting from Indian crypto exchanges to foreign ones between February and October 2022. The study also estimated that the current tax architecture may result in a loss of approximately Rs 99.3 trillion of local exchange trade volume over the next four years.

Additionally, the use of international exchanges raises concerns about data privacy, as user data is stored abroad with less recourse for Indian users. The government also loses out on potential tax revenue and goes against the current policy of trying to improve the ease of doing business.

Optimising these taxes will level the playing field for Indian exchanges and will be in line with the government’s policies of Atmanirbhar Bharat and Make in India.

India is the G20 president for the first time and will remain at the helm of this influential grouping for a year. The G20 uniquely offers a platform that has on board the world’s major developed and emerging economies. As India navigated the global pandemic and the recent Ukraine crisis adroitly, the world has taken notice of India’s approach. Both PM Modi and FM Sitarman have said on numerous occasions that crypto regulation has to be a worldwide effort. The G20 presidency gives India a unique opportunity to set the agenda on global crypto regulation because what is adopted by the G20 countries will set the tone for the rest of the world to follow.(The author, Rajagopal Menon is Vice President, WazirX)

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *