The Indian crypto and Web3 industry had been eagerly awaiting any mention of the crypto sector in the interim budget speech presented by India Finance Minister Nirmala Sitharaman on February 1. Unfortunately, their hopes were dashed as the finance minister did not even acknowledge the sector in her hour-long speech. This has left members of the industry feeling disappointed and overlooked. Despite this setback, there is still hope among industry members that changes could be implemented in the budget finalized by the elected government after the completion of the general elections later this year.
Rajagopal Menon, the vice president of WazirX, expressed his belief in the potential of crypto and virtual digital assets to contribute to the growth of India. He stated that integrating provisions for long-term financing of domestic crypto projects would empower individuals at the grassroots level and also benefit the digital public infrastructure and the government’s aspiration for research. Menon emphasized that India is at a crucial phase in the crypto revolution and urged the government to consider the industry’s existing requests for a reduction in TDS rates to 0.01 percent and the offset of losses for traders.
The past week has seen the trending hashtag #ReduceCryptoTax on social media platforms in India, with thousands of posts demanding a revision of the country’s crypto tax policy. Since July 2022, India has implemented a one percent tax deduction on each crypto transaction and imposed a 30 percent tax on all crypto profits. According to industry members, this taxation system has had a detrimental impact on crypto-related activities in India, leading to a decline in the number of Web3 talent and companies relocating to more crypto-friendly nations. Some crypto players in India have even announced staff cuts due to the decrease in users and queries related to crypto.
Members of the crypto sector had high hopes for the interim budget, particularly in three key areas: flexible tax slabs, a reduction of TDS from one percent to 0.01 percent on each crypto transaction, and the allowance of carrying forward losses similar to stocks. Unfortunately, these requests were left unaddressed in the budget speech. However, the finance minister’s proposal to allocate Rs. 1 Lakh crore with a 50-year interest-free loan to support India’s youth has been seen as a positive step by crypto stakeholders. They believe that this initiative will encourage young users to scale up their crypto endeavors.
High TDS and income tax rates continue to pose significant obstacles to the growth of India’s Web3 industry. With these issues remaining unresolved, stakeholders are now anxiously waiting for the final budget, which is expected to be announced around May this year. Dilip Chenoy, Chairman of the Bharat Web3 Association (BWA), expressed optimism for the sector’s future in the country but acknowledged that any major changes are more likely to be announced after the general elections.
The Indian crypto sector’s disappointment in the lack of attention given to their demands for a reduction in crypto tax in the interim budget speech is evident. Despite this setback, industry members remain hopeful that changes will be implemented in the final budget after the general elections. The crypto community continues to mobilize and advocate for a more favorable tax policy to attract and retain Web3 talent in India. Only time will tell how the government responds and whether it will make the necessary adjustments to support the growth of the crypto sector.