Crypto firms are urging a revision in crypto tax rates and expansion of blockchain research.
Last year, Sitharaman did not mention crypto or blockchain in her budget speech
Photo Credit: Unsplash
The government is set to present the Union Budget for the next financial year on February 1. With only a couple of days until the next budget is revealed, members of India's Web3 sector have revealed some of the changes to policy and taxation that they are hoping to see during the coming year. In addition to calling for revised crypto tax rates, crypto firms have urged the government to prioritise measures that ensure India remains competitive with other countries, particularly in the realm of emerging technologies.
Neither India nor the US have formulated rules or regulations to govern the burgeoning crypto sector. Leaders of crypto firms claim that India has a unique opportunity to launch itself as a business-for-blockchain hub with one of the largest pools of developers in the world.
“The US will take aggressive strides in crypto regulation. India, in the coming budget, should talk about prioritising investments to improve our digital infrastructure, expand blockchain research, and introduce clear policies to regulate the sectors of emerging technologies like blockchain, crypto, and Artificial Intelligence (AI),” Unocoin Co-Founder Sathvik Vishwanath told Gadgets 360.
Vishwanath also said that if the government aligns its approach on Web3 with global trends and focusses on digital asset innovation, the country will be competitive with other nations that are also working on the same technologies.
In the US, the Securities and Exchange Commission (SEC) has set up a special Task Force to accelerate work on crypto-related legislation. The UK plans to finalise its crypto rules by 2026. India, meanwhile, does not have any specific timeline by which it is likely to get its comprehensive crypto rules.
Cryptocurrency earnings are taxed at 30 percent in India, and a one percent tax deducted at source (TDS) is levied on each transaction. The government introduced these taxes on April 1, 2022. The crypto sector has repeatedly urged the authorities to revise and reduce these tax rates to help the sector grow.
“Currently, high taxes and TDS law in India have pushed investments pouring into the Web3 sector to other countries like the UAE. This has led to domestic innovation being hindered. Budget 2025 must come with tax rate revisions and permission for loss offsets,” said Sonu Jain, Chief Risk and Compliance Officer at 9Point Capital.
Last year, Finance Minister Nirmala Sitharaman announced the abolishment of angel tax for all classes of investors. This rule levied taxes on investments from wealthy individuals who pour their own capital into startup businesses. It is worth noting that last year's budget speech did not include any mentions of crypto or blockchain.
“If the Finance Minister focuses on smart taxes rules and blockchain development, it could have a big impact on India's global position in the crypto sector, which is presently valued at over $3 trillion,” said Thangapandi Durai, CEO of Madurai, Tamil Nadu-based Koinpark crypto exchange.
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