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Crypto industry body seeks TDS cut to 0.01% in budget | Budget 2024 News
The crypto body has further sought an increase in the threshold limit for TDS deduction under Section 194S of the Income Tax Act from Rs 10,000 to Rs 5,00,000.
Photo: BloombergHarsh Kumar New Delhi
Crypto and Web3 industry body Bharat Web3 Association (BWA) has urged the finance ministry to reduce the tax deducted at source (TDS) on transfers of virtual digital assets (VDA) from the current rate of 1% to 0.01%.
“We believe that the stringent tax framework and lack of regulation have led to capital flight, resulting in significant revenue loss for the Indian VDA sector and the government in recent years. This has forced Web3 startups and entrepreneurs to relocate to more VDA-friendly jurisdictions. The lack of regulation is hampering the Web3 startup ecosystem in India,” said Dilip Chenoy, President, Bharat Web3 Association.
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The industry body also called for a review of the 30% flat tax rate applicable to income from the transfer of VDA.
The crypto body has further sought an increase in the TDS deduction threshold limit under Section 194S of the Income Tax Act from Rs 10,000 to Rs 5,00,000.
The industry is also advocating that revenues from the transfer of VDAs should be treated on the same basis as existing revenue sources.
BWA has members such as Coindcx, Coinswitch, Wazirx, Zebpay, Mudrex, Suncrypto, Koinbx, Giottus, Transak, Cofinex and Coinbase.
In the FY2022 budget, the Union Finance Minister introduced a 30% tax on the transfer of any virtual digital asset, including cryptocurrencies. Under this policy, only the acquisition cost can be deducted while calculating the income from such transfers. Also, losses arising from such transactions cannot be carried forward.
“We urge the government to introduce clear and industry-friendly regulations and tax reforms that will enable this emerging sector to thrive and create new opportunities and revenue streams,” Chenoy added.
The BWA also requested the inclusion of foreign exchanges within the scope of the TDS mandate.
On June 14, Business Standard reported that the Financial Intelligence Unit-India (FIU-India), the national agency tasked with analyzing suspicious financial transactions, has received applications from four more offshore cryptocurrency exchanges to operate in India again, according to a senior government official familiar with the matter. Earlier in 2024, India had banned nine cryptocurrency exchanges — Binance, Kucoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfenix — for failing to comply with anti-money laundering laws in the country. Currently, there are 46 registered crypto entities. With Kucoin and Binance, the total number of such entities will increase to 48.