Key takeaways:
- Since it has only been ten months since the tax regulations were adopted in March 2022, experts believe that the Indian government needs more information and time before deciding on strict tax policies.
- The Indian government has made one committee to study crypto.
Millions of cryptocurrency owners in India lost hope when the union budget for 2023 failed to include cryptocurrencies or blockchain technology. The hefty crypto tax put in place in March 2022 was something that many in the Indian crypto industry hoped would be reduced.
On February 1, Indian Finance Minister Nirmala Sitharaman announced significant modifications to the income tax bands in the government budget. The minister should have brought up blockchain technology, digital currency issued by central banks, or cryptocurrency during the debate.
A 30% profit tax and a 1% tax deducted at source (TDS) on all transactions were imposed on bitcoin transactions last year by the largest democracy in the world. What the industry had anticipated would be a “period of pain” turned out to be the year.
The main reason for adding a TDS to all cryptocurrency transactions was to count the number of Indian people actively using cryptocurrencies. The government will have access to this information starting in May 2023 when Indians file their income tax returns.
Within ten days of the new tax policy, trading volume on prominent cryptocurrency exchanges in India decreased by 70% and nearly 90% over the following three months. The strict tax laws prompted emerging cryptocurrency projects to leave India and drove cryptocurrency traders to offshore exchanges.
Subhash Chandra Garg, a former finance secretary of India, had previously noted that crypto taxes need much more clarity. Chandra was also the head of the committee that created the initial crypto legislation. He mentioned:
“we might not see any new changes in the upcoming budget 2023.”
The co-founder of CoinDCX, another Indian exchange, Sumit Gupta, stated that while this was not good for our nation and individuals working in this industry in India, he was still dedicated to working with the government to develop rules that are supportive of the ecosystem’s long-term growth. He also stated:
“I think #Budget2023 is quite comprehensive and pragmatic, bound to set India on the path to becoming one of the world’s leading economies.”
Another reason for the absence of cryptocurrency from the union budget could be India’s emphasis on adopting a global strategy for crypto laws, particularly a uniform taxonomy. To establish a single standard for cryptocurrencies worldwide, the finance minister requested cooperation from G20 countries in July 2022.
