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Budget 2024: Crypto community wants to reduce tax deductions on the transfer of digital assets
The monsoon session of Parliament begins tomorrow, July 22. Finance Minister Nirmala Sitharaman will introduce the bill. union budget July 23 will be the Union government’s first budget after the May 2024 election results. Ahead of the 24-25 Union Budget, the crypto community is pushing for several key changes that could have a significant impact on the industry. An Economic Times report states that these proposals are aimed at creating a more conducive environment for cryptocurrency trading and blockchain technology adoption in the country.
The main demands of the crypto community include:
Reduction of TDS on the transfer of VDAs
One of the key proposals from the crypto community is to reduce the rate of tax deducted at source (TDS) on transfers of virtual digital assets (VDA) under Section 194S from 1% to 0.01%. The current TDA rate, the report said, acts as a deterrent for investors, leading to reduced liquidity and market participation. Reducing this rate, according to the crypto community, can stimulate more transactions and promote a more robust trading environment.
Revise the tax deduction limit threshold
Further, the community has recommended reconsidering the threshold for tax deduction under Section 194S. It proposes an increase from Rs 50,000 to Rs 5,00,000.
Compensation and carryover of losses
Cryptocurrency industry players have also advised offsetting and carrying forward losses, similar to other industries. Currently, losses from trading virtual digital assets (VDA) cannot be carried forward to offset future VDA gains or other income, which hinders long-term investment and strategic business decisions. The community says introducing this flexibility would align the cryptocurrency market with other financial markets, helping to develop a more stable and attractive environment for investors.