Indian Crypto Industry Seeks Tax Relief and Regulatory Framework in Budget 2024-25

Indian Crypto Industry Seeks Tax Relief and Regulatory Framework in Budget 2024-25

Tax Reduction Proposals:

• Indian cryptocurrency exchanges and firms are advocating for revisions to the current tax structure within the upcoming Union Budget (2024-25).

• A key request is a reduction in the capital gains tax on cryptocurrencies, currently set at 30%. The industry argues for a more aligned tax rate with other capital assets.

• Additionally, they seek a significant decrease in the 1% Tax Deducted at Source (TDS) levied on crypto transactions, aiming to streamline processes and potentially spur market activity.

Regulatory Clarity Desired:

• The Indian crypto sector is yearning for a well-defined regulatory framework from the government. This would establish clear guidelines for businesses, legitimize the industry, and bolster user confidence in the market.

Industry Rationale:

• The high tax rates implemented in the previous budget (2022-23) are viewed as a major contributor to the decline in crypto trading activity within India.

• By comparison, crypto firms believe the current tax structure creates a competitive disadvantage relative to other countries with more relaxed regulations.

Potential Developments:

• While the government may consider some concessions, it’s important to acknowledge that the upcoming budget is likely to be a vote on account, potentially limiting major announcements.

• Striking a balance between fostering the growth of the crypto industry and addressing potential risks will likely be a key focus for policymakers.