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What does the crypto industry expect from Budget 2024?
The trajectory of cryptocurrency adoption and regulatory frameworks has seen significant milestones. From the first notices and legal implications for participants in 2020 to the 30% tax on winnings today, the sector has evolved a lot. As the interim period approaches Budget 2024The crypto industry seriously expects the government to address the current challenges, signaling a critical moment for the sector.
Four Important Concerns Despite the Indian government’s commendable efforts to foster innovation and responsible growth in the crypto space, four concerns in the existing tax framework require special attention.
First, it is essential to establish a clear distinction in the tax treatment between long-term and short-term capital gains. This differentiation would promote the use of cryptocurrencies as a viable long-term wealth creation tool.
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Second, a major concern lies in taxing investors based on their respective income brackets rather than opting for a flat tax rate of 30%. This approach aims for a fairer and more nuanced tax structure, reflecting individual financial situations.
Third, a key consideration is the ability to offset crypto losses with gains. This adjustment aims to create a fairer tax framework, aligning with practices applicable to other asset classes and mitigating potential disincentives for investors. Finally, a significant concern is the current withholding tax (TDS) rate of 1%. Arguing for a reduction to a more manageable rate, this proposal seeks to strike a balance between regulatory oversight and the promotion of a thriving crypto ecosystem.
The path to follow
India has positioned itself as a global leader in the popular adoption of cryptocurrencies. The growing community of crypto enthusiasts, developers and entrepreneurs highlights the sector’s potential to significantly contribute to the country’s economic growth. Therefore, as the government develops the budget for 2024, whether interim or comprehensive, it is crucial to establish a regulatory framework that not only protects the interests of investors but also fosters an enabling environment for investors to flourish. the crypto industry.
Addressing these concerns is not just about regulatory compliance; it’s about recognizing the evolving nature of finance. By taking a forward-looking approach, the government can position India as a global hub for crypto innovation, attracting talent and investment and paving the way for a resilient digital economy.
Conclusion
The government’s proactive measures in previous budgets underscore its commitment to fostering innovation and responsible growth. Industry expectations, centered on a reduction in the TDS rate and the ability to offset losses, align with the need for a balanced and adaptive regulatory framework.
As the crypto landscape continues to evolve, a collaborative and forward-thinking approach will help shape a vibrant and sustainable future for the sector in India. The government’s actions in Budget 2024, whether an interim or full budget, will not only shape the future of the crypto industry but will also play a crucial role in shaping the position of India in the global digital economy.
The author is CEO and co-founder of Mudrex
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)