The cryptocurrency industry in India is eagerly anticipating changes in Budget 2024 that could bolster growth and innovation. Industry experts have voiced their expectations, emphasizing the need for a regulatory and tax environment that better supports the burgeoning digital economy.
The current regulatory framework, introduced over two years ago in the February 2022 Budget, has inadvertently driven transactions to offshore platforms, complicating efforts to monitor and regulate them effectively.
Ashish Singhal, a prominent figure in the industry, stressed the importance of revisiting the taxation of Virtual Digital Assets (VDAs) in the upcoming Union Budget. He suggested reducing the Tax Deducted at Source (TDS) rate on VDA transfers from 1% to 0.01% under Section 194S. This adjustment aims to bring a significant portion of VDA transactions under formal tax oversight, thereby enhancing compliance and curbing capital flight.
Singhal also advocated for allowing the offsetting of losses in line with other sectors, which he believes would promote responsible trading practices and mitigate risks of tax evasion. Additionally, he proposed reassessing the flat 30% tax rate on income from VDA transfers to ensure parity with tax rates applicable to other technology-enabled sectors.
Raj Karkara, COO of ZebPay, echoed similar sentiments, underscoring the pivotal role of 2024 for the crypto industry. He highlighted recent developments such as the approval of Spot Bitcoin ETFs and ongoing approvals for Ethereum ETFs in the United States, alongside significant events like the 'Bitcoin Halving' and evolving regulatory stances.
Karkara emphasized the critical need for regulatory clarity to establish a secure and transparent investment environment. He expressed optimism that Budget 2024 would propose a collaborative approach between the government and the Web3 industry, building on positive outcomes from international forums like the G20 summit.
In his view, a comprehensive regulatory framework is essential to unlock blockchain's transformative potential fully, driving financial inclusion and innovation in India. He advocated for reducing TDS and Capital Gains Taxes to foster a more inclusive ecosystem, encouraging broader participation from investors and stakeholders.
Ultimately, clear and supportive regulations, as envisioned by industry leaders like Singhal and Karkara, are expected to pave the way for sustained growth, innovation, and broader adoption of cryptocurrency technologies in India's evolving digital landscape.
