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Budget 2024: Crypto industry players want 1% TDS to be reduced; a comprehensive regulatory framework is in place
Despite an arguably bad year that cryptocurrency players left behind in 2023, this new year has started on an optimistic note with a massive surge in bitcoin prices and long-awaited approval to spot the Bitcoin ETF by the American regulator SEC. This historic decision led to a bitcoin price surgewhich exceeded $47,000.
Now as the entire industry looks forward to the interim Union Budget 2024, it is looking forward to a reduction in tax rates on crypto transactions and a regulatory framework.
It is essential to remember that the Ministry of Finance introduced in 2022 one percent TDS on crypto transactions and 30% tax on capital gains made on the sale of cryptocurrencies. This led to a massive drop in transaction volumes and now industry representatives are urging authorities to cut rates in the coming months. Budget 2024otherwise cancel completely.
Let’s hear it straight from the horse’s mouth.
Need of the hour
Shivam Thakral, CEO of BuyUcoinbelieves that the Indian crypto industry is perched between potential and actual limbo, and the current need is a well-defined legal framework.
“The Indian crypto industry is somewhere between unlimited potential and frustrating limbo. In the next budget, we urge the government to replace uncertainty with clarity, not with a heavy hand, but with a guiding light. A well-defined legal framework should address tax complexities, establishing clear guidelines for income and transactions, not as barriers but as stepping stones,” says Thakral.
He also advocates the integration of cryptos with traditional finance. “Seamless integration with traditional finance is possible by fostering collaboration and driving mainstream adoption. We understand the need to protect investors, but overzealous regulation could harm our nascent ecosystem. Let’s find the right balance that promotes innovation while ensuring responsible participation,” he adds.
Lower tax rates
Ashish Singhal, co-founder and CEO of the group, PeepalCo believes that the current TDS rate of 1% on crypto transactions should be reduced to 0.01%, in addition to allowing compensation for losses from the sale of virtual digital assets (VDA) and processing revenue from cryptos on an equal footing with other capital assets.
“India presented its tax provisions for VDAs during Budget 2022. While the industry has welcomed the inclusion of VDAs in the tax law, certain provisions, like the high TDS rate, have led many users to turn to non-compliant foreign exchanges to transact , thereby exposing themselves to the risk of losing their investment and breaking the law. This has also resulted in lower tax revenue for the exchequer,” says Singhal.
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Vikram Subburaj, CEO of Giottus, agrees with the argument. “The 30% profit tax and 1% TDS, announced in the 2022 budget, have driven away a section of Indian investors towards foreign stock exchanges which are inherently non-compliant with Indian regulations. We believe that this leakage can be avoided if taxation is rationalized. »
Sumit Gupta, CEO and co-founder, CoinDCXalso, has similar views on these tax provisions.
“We have advocated a reduction in TDS rate from 1% to 0.01% in our proposal for the next Union Budget. Furthermore, we urged the authorities to reconsider the 30% flat rate applied to VDA revenues. The introduction of 1% TDS on Indian stock exchanges last year had a significant impact on these platforms, leading to an alarming 80% decrease in trading volume. »
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