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Angel tax scrapped for all tax categories; crypto tax remains unchanged By Nirmala Sitharaman
Finance Minister Nirmala Sitharaman presented the first budget of Modi 3.0, paving the way for development and opportunities. Sitharaman announced a comprehensive review of the Income Tax Act, 1961, aimed at making it concise, clear and easy to understand, thereby reducing litigation and disputes to ensure tax certainty. This review is expected to be completed in six months.
However, the rules for one sector remain unchanged: cryptocurrencies. For the crypto industry, the TDS is a key issue. The Bharat Web3 Association (BWA) has been demanding a reduction in the tax from 1% to 0.01% since its introduction two years ago.
Dilip Chenoy, President of Bharat Web3 Association, said Coindesk, “We had hoped for some easing of the VDA (virtual digital assets) tax framework in this budget, but the absence of any announcements is not particularly discouraging, given the government’s generally negative stance on the sector,”
Several proposals to promote investment and foster employment include waiving the angel tax for all categories of investors. Sitharaman said, “I have a few proposals to promote investment and foster employment. First, to strengthen the Indian startup ecosystem, boost entrepreneurship and support innovation, I propose waiving the angel tax for all categories of investors.”
Capital gains taxation will also be simplified under the new regime. Short-term gains on certain financial assets will be taxed at a rate of 20%, while long-term gains on all financial and non-financial assets will be taxed at 12.5%.
The capital gains exemption limit on certain financial assets will be increased to ₹1.25 lakh per annum. Listed financial assets held for more than one year will be classified as long-term assets, while unlisted financial assets and non-financial assets will have to be held for at least two years.
Further, the 20% TDS rate on redemption of units by mutual funds or UTIs will be removed and the TDS rate on e-commerce operators will be reduced from 1% to 0.1%. It is proposed that TCS credit will be given as TDS deducted from salary and delays in payment of TDS up to the due date of filing of return will be decriminalised.