Hello!
The budget is the first since Prime Minister Narendra Modi was elected for a third straight term.
India's Finance Minister Nirmala Sitharaman kept crypto tax rules unchanged in her address announcing the nation's budget for 2024-2025 on Tuesday. This was expected, as CoinDesk reported on Monday.
The primary demand from India's crypto industry was to reduce the controversial tax-deducted-at-source (TDS) policy on crypto transactions from 1% to 0.01%. It made its representations to government officials with evidence from several sources, including a think tank study that provided evidence to support a reduction in the TDS.
The industry also asked the government to establish progressive taxes on gains instead of the flat 30% rate, and allowing losses to offset gains. They have also pushed for multi-agency regulation.
"We were hoping for some relaxation to the taxation framework on VDAs (Virtual Digital Assets) in this budget, but the absence of any announcement is not particularly disheartening, given the Govt's overall negative stance towards the sector," said Dilip Chenoy, Chairperson, Bharat Web3 Association, adding that they would "continue to push for rationalization of the taxation framework."
Notably, the government increased the long term capital gains tax from 10% to 12.5% and short term capital gains taxes from 15% to 20%. Whether this will have any impact on crypto trading is unclear.
"The increase in Long Term Capital Gains Tax from 10% to 12.5% and Short Term Capital Gains Tax from 15% to 20% in Budget 2024 may incentivize retail investors to shift from traditional assets like securities to cryptocurrencies. While this shift is possible, it's important to note that crypto gains are taxed at a flat 30% rate, and unlike securities, losses in crypto cannot be set off against gains," said Rajat Mittal, a Supreme Court crypto tax counsel.
"On the positive, abolishing the angel tax for all classes of investors will work towards bolstering the Indian startup ecosystem," Chenoy said. "We look forward to more Web3 startups setting base in India, given India's immense Web3 talent and potential."
"CoinDCX welcomes the Finance Minister’s announcement in today’s budget regarding the abolition of the Angel tax for all classes of investors. We are confident that this will significantly bolster the Indian tech start-up ecosystem, especially in the Web3 sector," said Sumit Gupta, co-founder of Indian crypto exchange CoinDCX.
The budget is the first since Prime Minister Narendra Modi was elected for a third straight term. Modi's Bharatiya Janata Party (BJP) failed to secure a majority in this year's election, pushing them to form a coalition government, along with the limitations that come with it.
Among other initiatives, the budget revealed financial support of Rs 26,000 crore ($3.1 billion) to go toward road projects in Bihar, one state where Modi's alliance partner is, and Rs 15,000 crore ($1.8 billion) for another partner's plans for the development of a state capital in Andhra Pradesh.
This budget is being seen as a roadmap for his vision for the next five years, one that would consider the sentiment reflected in the unexpected election results.
Edited by Parikshit Mishra.
Source: Amitoj Singh – coindesk.com