- Taxation Reforms: The industry calls for a reduction in the TDS rate to enhance competitiveness.
- Strategic Measures: Establishing a self-regulatory body and aligning tax rates for growth and clarity in the sector.
As India gears up for the Union Budget of 2024, the nation’s cryptocurrency industry is bracing itself for potential reforms in taxation, regulatory frameworks, and strategic initiatives aimed at fostering growth. Leading figures in the crypto space are expressing the need for adjustments in existing tax rules to enhance the industry’s competitiveness and user adoption.
Taxation Reforms in Focus
Nischal Shetty, the co-founder of WazirX and Shardeum, emphasized the pressing need for changes in taxation, particularly pointing out the high Tax Deducted at Source (TDS) rate of 1%. Advocating for a reduction to 0.01%, Shetty believes that this adjustment will not only align India with global standards but also promote digital asset trading within the country’s jurisdiction. The disparity in TDS rates places India at a disadvantage compared to countries like the United States and the European Union.
Regulatory Clarity and Stability
Shetty further underscored the importance of specific domestic regulations tailored for India, emphasizing the need for stability within the industry. He called for the allocation of funds for domestic blockchain projects that showcase real-world utility and innovation, urging the government to consider strategic measures that align with the dynamic nature of the crypto sector.
Also Read: Google Removes Crypto Apps in India Amidst Regulatory Scrutiny
Addressing Challenges in Tax Code
Ashish Singhal, the CEO of CoinSwitch, echoed concerns about the stagnation resulting from specific provisions in the Income Tax Act related to Virtual Digital Assets (VDAs). Singhal stressed the necessity of continuous updates to India’s tax code to accommodate the evolving nature of the crypto sector. He advocated for a forward-looking approach to adapt rules that can keep pace with the industry’s rapid changes.
Strategic Initiatives for Growth
Sumit Gupta, co-founder of CoinDCX, proposed not only a reduction in the TDS rate but also aligning tax rates with other asset classes by reducing them from 30%. Additionally, Gupta recommended the establishment of a self-regulatory body for the crypto and blockchain sector. He sees this as a proactive step that aligns with the government’s vision of ‘Digital India’ and positions India as a global player in the web3 and blockchain narrative.
Gupta expressed optimism that a standardized regulatory framework, coupled with strategic measures, could expedite India’s journey toward achieving its ambitious 5 trillion-dollar economy target.
Conclusion
India’s cryptocurrency industry is holding its breath, anticipating favorable changes in taxation, regulatory frameworks, and strategic initiatives in Union Budget 2024. The sector aims to align itself with global counterparts, unlocking opportunities for growth and positioning India as a prominent player on the world stage. As the industry watches global developments, it remains optimistic about the potential for positive shifts that could catalyze domestic growth.
