Investors fear crypto tax could continue as Nirmala Sitharaman returns as finance minister

India concluded its general elections on June 1, with results last week paving the way for Narendra Modi to be re-elected as prime minister for a third consecutive term. As part of Prime Minister Modi’s newly formed cabinet, Nirmala Sitharaman has been reassigned as the country’s finance minister, after first taking charge of the ministry in 2019. India’s crypto community has expressed mixed reactions to Sitharaman’s reappointment as finance minister.

Cryptocurrencies in India are under the scanner of the Ministry of Finance. Since 2022, all profits from crypto transactions in India are subject to a 30 percent tax, while a Tax Deducted at Source (TDS) of 1 percent is applicable on the transfer of Virtual Digital Assets (VDAs).

Dilip Chenoy, chairman of the Bharat Web3 Association (BWA), congratulated the new government and said the Web3 Advisory Group will continue to work with officials to boost the growth of Web3.

“At BWA, we remain committed to working with the government to promote the growth and development of the Web3 sector, with the aim of establishing India as a global hub for Web3. We look forward to our continued engagement and extend our support to the government for the development of forward-looking regulations that foster innovation while prioritizing consumer protection in the ever-evolving Web3 space,” Chenoy wrote on LinkedIn.

The Indian crypto circle was waiting for FM Sitharaman to revamp the tax laws for the crypto sector. Despite the outrage, the finance minister did not announce any tax relief for the crypto sector when he presented the interim annual budget earlier this year.

Her reappointment as finance minister has raised concerns in the Indian crypto community, which fears that there are no tax reforms in the pipeline for the digital asset industry. Many have taken to social media to express their thoughts on the development.

FM Sitharaman is expected to present the full budget for FY 2024-25 next month. Crypto commentators expect the finance minister to reduce the one percent TDS rebate on every crypto transaction to 0.01 percent as part of her upcoming budget presentation.

In March this year, Sitharaman had said that India did not see any cryptocurrency as a ‘currency’ option. Sitharaman had then said that “assets created in the name of crypto can be assets for trading, assets for money creation, assets for many other things.”