How India’s Crypto Sector Reacted to the Union Budget 2024
Finance Minister Nirmala Sitharaman on Tuesday presented the Union Budget for 2024-25, which introduced a slew of reforms across sectors. The budget made no mention of cryptocurrencies or blockchain technology, two areas that are currently unregulated in India. India’s Web3 sector has been calling on the government to reduce the one percent tax deducted at source (TDS) on all crypto transactions. However, the Web3 community continues to advocate for patience and trust in the government for comprehensive sector-specific reforms in the future.
One of the major reasons for disappointment in the crypto sector was the lack of reduction in TDS on crypto transactions in India. The industry has repeatedly presented reports to the government, asking for a reduction in the tax.
“We have submitted data-backed quantitative analyses regarding the flight of user trading and transactions, as well as the potential increase in government revenue if the tax structure is revised,” the Bharat Web3 Association told Gadgets360. “We will continue to push for rationalization of the tax framework, which includes reducing the TDS to 0.01 percent, allowing loss carry forward on VDA transactions, and amending the 30 percent tax on capital gains.”
Members of the crypto industry are attempting to rationalize the government’s exclusion of cryptocurrency-centric reforms from this year’s budget. Some have raised concerns that this could be a silent fallout from the recent WazirX wallet exploit, which led to the theft of over $230 million (roughly Rs. 1,942 crore) from the exchange’s reserves.
While clarity on the government’s crypto outlook is still awaited, the Web3 community has taken a respite with the removal of angel tax for all types of investors. The rule imposed taxes on investments that startups received from angel investors, wealthy individuals who put their own capital into startup companies. The move is intended to boost India’s overall startup ecosystem.
According to a report Published by HashEmergent and KPMG in April this year, India has over a thousand startups with Bengaluru as its hub. The same report also noted that India’s Web3 sector will receive investments worth $250 million by 2023.
Now that the investor tax has been abolished, the Web3 group expects to see an explosion of blockchain startups in the coming months.
“We are confident that this will significantly strengthen the Indian tech startup ecosystem, especially in the Web3 sector. As Web3 becomes more mainstream, investment in Web3 startups is expected to increase,” Sumit Gupta, Co-Founder of CoinDCX told Gadgets360.
