Crypto Industry Seeks Tax Cuts and Clear Regulations in 2024
This blog outlines the critical expectations and challenges of the crypto industry ahead of Union Budget 2024, providing essential insights into potential tax and regulatory changes that could impact the market.
The crypto industry is looking forward to the Union Budget 2024. Many hope for significant changes to the current tax and regulatory framework. Key expectations include a reduction in transaction tax. They also seek the ability to offset losses. Lastly treating capital gains from crypto assets on par with other income sources is also essential.
In Budget 2022-23, the government imposed a 30% tax on gains from virtual digital assets (VDAs). This included a 1% tax deducted at source (TDS) on every transfer, however, the legality of these assets remains unaddressed. Manhar Garegrat of Liminal Custody highlights the challenges: lack of capital gains distinction, high withholding tax, and no loss offset capability.
In contrast, the short-term capital gains (STCG) tax on listed securities is 15%. Long-term capital gains (LTCG) tax is 10% on gains over ₹1 lakh. Ashish Singhal from CoinSwitch suggests the government should re-examine the 30% tax rate on VDAs and align it with other tech sectors. Additionally, they should consider increasing the transaction threshold to reduce administrative burdens.
Traditional assets allow loss offsetting but crypto does not. Dilip Chenoy of Bharat Web3 Association urges the finance ministry to permit loss setting-off and treat crypto income on par with other sources. The 1% TDS. It is intended to track asset movements. It has significantly impacted the market. Shivam Thakral of BuyUcoin advocates reducing TDS to 0.01%.
Regulatory clarity is crucial. Many Web3 startups move to favorable jurisdictions like Dubai. Rajagopal Menon of WazirX emphasizes the need for balanced regulations. He anticipates crypto rules by 2025 under the G20 ministerial declaration.
In summary, the crypto industry seeks tax rationalization and clearer regulations. These measures will foster growth and attract investments. Addressing these issues in Union Budget 2024 could provide the sector with a level playing field.
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