Gairika Mitra
India’s latest budget announcement created fury among the crypto clan, majorly because the controversial tax regime for cryptocurrencies remained unaltered. Despite consistent pleading from the community the 2024-2025 Budget upheld the existing rules, causing furore and disappointment among the crypto space on social media platforms.
Finance Minister Nirmala Sitharaman unveiled the full Budget 2024-2025 on Tuesday at the Indian Parliament, following an Interim Budget presented in February.
Dilip Chenoy, Chairperson of the Bharat Web3 Association, expressed both optimism and concern following the budget announcement. “We were hoping for some relaxation to the taxation framework on VDAs in this budget,” Chenoy said. “However, the absence of any announcement is not particularly disheartening, given the Government’s overall negative stance towards the sector.”
The Association has submitted data-backed quantitative analyses illustrating the flight of user trading and transactions and the potential increase in government revenue should the taxation structure be revised. Despite the lack of immediate changes, the Association remains committed to advocating for a more rationalized taxation framework. Their proposals include reducing the TDS to 0.01%, allowing the setoff of losses on VDA transactions, and modifying the 30% tax on capital gains.
Chenoy highlighted the positive aspects of the budget, such as the abolition of the angel tax for all classes of investors, which is expected to bolster the Indian startup ecosystem. “We look forward to more Web3 startups setting base in India, given India’s immense Web3 talent and potential,” he added.
The emphasis on blockchain skilling and talent development in the Economic Survey was also noted as a significant step towards empowering youth and contributing to a skilled ecosystem for Web3 adoption. “The impetus provided to blockchain skilling and talent development can empower youth for the exciting opportunities in Web3,” the Bharat Web3 Association chairperson underlined.
Web3buzz, a Web3 news and knowledge platform, emphasized that the current stringent tax regime is seen as a barrier to the growth of emerging technologies such as Web3 and blockchain. It argued that a more supportive tax policy could potentially contribute significantly to India’s GDP, projecting an addition of USD 1.1 trillion by 2032.
Vijay Saran, an entrepreneur and YouTuber expressed his disappointment over the absence of any mention of cryptocurrencies in the Union Budget 2024-25. He also pointed out that the Indian government did not address any issues related to cryptocurrencies, leaving the existing tax policies unchanged. As a result, the tax on crypto transactions remains at 30%, with a 1% Tax Deducted at Source (TDS).
Ashish Singhal, Group CEO at PeepalCo, and a co-founder of CoinSwitch labeled the 2024 budget a “mixed bag.” He said, “As a founder and angel investor- I’m really happy that the Angel tax has been abolished. This will help the entrepreneurial ecosystem in India.”
However, he highlighted, “On crypto, we were hopeful the government would reduce taxation to make it at par with other asset classes. Unfortunately, that has not happened. It’s a missed opportunity to encourage startups and investors in the crypto space.”
Sujal N Shah, Purplex CEO, polled LinkedIn users last month on potential changes to India’s crypto tax policies. The overwhelming response was a desire for a significant reduction in TDS (tax deducted at source). However, Tuesday’s budget announcement by the Modi government did not address this concern.
The crypto community remains watchful and hopeful that future budgets will consider their calls for a more rationalized tax framework that could help drive innovation and growth in the digital asset sector.
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Gairika holds positions in BTC. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Magazine and The Shib Daily are the official media and publications of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
