The Bharat Web3 Association (BWA) met with industry stakeholders in New Delhi on July 11, ahead of the upcoming FY2024-2025 budget announcement. During the meeting, Dilip Chenoy, the chairman of this Web3 advisory body, said that the industry is willing to be patient and give the government enough time to access the results of imposing crypto taxes. However, he raised concerns that this period of analysis is rapidly driving the Indian Web3 circle abroad.
Speaking to the media, Chenoy said that the existing taxes on cryptocurrencies have not achieved their intended purpose of tracking these financial transactions, which are otherwise largely anonymous. Instead, Chenoy said, these taxes incentivize the Indian Web3 community to flock to other easily available channels, allowing disreputable elements to continue engaging in illegal activities.
“The use of blockchain-related technologies in the business sector has increased in recent times. India boasts of over 900 companies operating out of its Web3 sector. Projections predict that the sector will add $1.1 trillion to India’s GDP in the next decade, by 2032. We hope that the government rationalises the tax framework applicable to digital assets in the upcoming Union Budget,” the BWA said.
Proposed Changes to Crypto Tax in India
Chenoy, along with BWA co-directors R. Venkatesh and Kiran Vivekananda, said they have had several opportunities to discuss the future of Web3 with government officials in recent times. Several pro-growth suggestions from the BWA have been presented to the government for consideration.
The reduction of TDS on every crypto transaction from one percent to 0.01 percent is one of the suggestions. The BWA believes that investors and entrepreneurs associated with the sector should be able to save something after tax cuts, which will give them opportunities to invest further. The BWA has urged the Ministry of Finance to allow traders of virtual digital assets (VDAs) to offset losses with profits made elsewhere.
Moreover, the advisory body has recommended increasing the threshold for withholding tax on crypto profits from Rs. 10,000 to Rs. 50,000 to Rs. 5 lakh.
“India is on track to become a Web3 powerhouse despite regulatory uncertainties. The country should not lose the opportunity to become a leader in Web3 due to regulatory delays,” the association noted.
Chenoy said the government has not yet responded to their suggestions.
BWA’s Vision on Web3 in India
Despite India’s critical view on cryptocurrency-related activities, the country still has a positive attitude towards exploring blockchain technology.
In recent times, players from India’s clinical research sector, e-commerce companies and the railway industry have been experimenting with Web3. The BWA has welcomed the exposure of India’s enterprise industry to blockchain-related technologies.
While the BWA has observed a trend in the rising number of startups and enterprise use cases of blockchain technologies, it has also noticed a deathly silence around the crypto mining industry in India so far. The association has called for discussions on the matter in the coming months, especially as several parts of the world are allowing crypto mining activities to create more employment opportunities in the regions.
Talking about India’s eRupee CBDC, BWA leaders said that Indians here are already used to using UPI and hence eRupee is unlikely to become a fad. However, in other countries, the use of CBDCs could have a bigger impact on the masses when it comes to facilitating peer-to-peer payments, predicts BWA.
