India’s recent release of the Union Budget for 2024-25 has left many, especially those in the cryptocurrency community, wondering about the implications as there was no mention of digital assets in the budget announced by Finance Minister Nirmala Sitharaman on July 23.
This silence has raised concerns as other countries are taking steps to regulate and adopt cryptocurrencies, highlighting a contrasting approach taken by India.
No Changes in 2022 Tax Regime: Reactions from the Community
The budget outlined various priorities like agriculture and employment but failed to address virtual currencies. This omission is seen as a missed opportunity to establish a framework for innovation and investment in this rapidly evolving sector.
While the budget introduced some significant changes such as eliminating angel tax for startups and adjusting the equalization levy, no adjustments were made regarding digital assets, keeping the existing tax framework unchanged.
The absence of any mention of cryptocurrencies in the budget has left the Indian crypto community concerned and disappointed as the status quo from 2022, including a 30% tax on crypto transactions and 1% TDS, remains unchanged.
Impact of India’s Crypto Tax Policy
The stringent tax policies have had a negative impact on the Indian crypto market, with trading volumes on local exchanges dropping by 97% and active user participation decreasing by 81%, according to the National Academy of Legal Studies and Research (NASLAR).
NASLAR’s findings indicate that these declines not only harm the crypto industry but also result in substantial losses to the national treasury, estimated at 59 billion Indian rupees ($700 million) annually.
On the other hand, NASLAR suggests that reducing the crypto TDS to 0.01% could potentially double the government’s revenue from the industry.
