Why India’s Crypto Industry Awaits Union Budget 2024
The upcoming Union Budget for 2024 has led India’s cryptocurrency industry to anticipate key changes that could impact the sector’s growth. Nischal Shetty, the co-founder of crypto exchange WazirX and Layer 1 blockchain Shardeum, highlighted the need for adjustments in taxation rules.
He stated, “The crypto industry looks forward to the Union Budget helping the crypto sector’s growth and user adoption.” One of the main concerns raised by Shetty and others in the industry was the high Tax Deducted at Source (TDS) rate of 1%.
“We propose a reduction of the TDS to 0.01%, which will help compete with the rest of the world and at the same time ensure that digital assets trading operations are done within the Indian jurisdiction,” Shetty added.
Indian sector is competing
Shetty emphasized that the high TDS rate puts India at a disadvantage compared to other countries like the United States and the European Union. The Indian leader believes that lowering the TDS rate would not only level the playing field but also encourage digital asset trading within Indian jurisdiction.
Shetty explained, “The industry would also like the ministry to consider rolling out specific domestic regulations for India for greater stability, and dedicate funds for domestic blockchain projects, exemplifying real-world utility and innovation.”
Regulatory evolution in crypto reforms
Ashish Singhal, the co-founder and CEO of CoinSwitch, previously stressed that while the incorporation of Virtual Digital Assets (VDAs) into the Income Tax Act was met with approval, specific provisions resulted in stagnation. The exchange chief also noted that the elevated Tax Deducted at Source (TDS) rates and the absence of provisions for offsetting losses have not worked well for Indian VDAs.
In a post, he underlined the importance of adapting rules for the dynamic sector.
Singhal pointed out, “The best product is the one we ship today, until it is replaced tomorrow with an improved version. The best tax code then is the one that is continuously updated to keep pace with the changes. And updates are in order for India’s tax code for Virtual Digital Assets.”
Strategic measures for sector’s growth
Sumit Gupta, co-founder of CoinDCX, also suggested lowering the TDS rate from 1% to 0.01% and aligning tax rates with other asset classes by reducing them from 30%. Such changes, he believes, would breathe new life into the crypto sector.
Furthermore, Gupta proposed the establishment of a self-regulatory body for the crypto and blockchain sector.
He said, “This proactive step aligns with the government’s vision of ‘Digital India’ and positions India as a global player in the ‘Make in India’ narrative and recognising the vast economic and job creation potential inherent in web3 and blockchain technologies.”
The top exchange executive also believes that the measures can expedite India’s 5 trillion-dollar economy target sooner than anticipated.
“By implementing a standardized regulatory framework for the crypto and blockchain sectors, the government would not only provide clarity but also unlock a multitude of opportunities and use cases at a global scale, empowering India Inc to lead on the world stage, Gupta added.
India’s cryptocurrency industry is pinning large hopes of growth against its global counterparts. With the US approving spot Bitcoin ETF, the industry awaits favorable changes in taxation, regulatory clarity, and strategic measures to boost domestic sector growth.
Also Read: Union Budget 2024: G20 Influence on Crypto Tax Reforms
The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.
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