Budget 2024 is eagerly awaited by the crypto industry, with hopes for favorable measures to be announced by Finance Minister Nirmala Sitharman. These measures include a reduction in transaction taxes, the ability to offset losses, equal treatment of capital gains from crypto assets, and the establishment of a supportive regulatory regime.
In the previous Budget 2022-23, regulations were introduced mandating that gains from virtual digital assets (VDAs) or crypto assets be taxed at a flat rate of 30 per cent, along with a 1 per cent tax deducted at source (TDS) on every transfer of such assets. However, the legality of these assets was not clarified, which has been a long-standing demand from the industry.
Industry experts are urging the government to create a regulatory and tax environment that supports the digital economy and fosters innovation. The current taxation framework has led to unintended consequences, such as a shift in VDA transactions to offshore platforms, impacting tracking and tracing of transactions.
Key requests for Budget 2024-25 include a reduction in TDS on the transfer of VDAs, the ability to setoff and carry forward losses, and equal treatment of income from VDAs. These changes would encourage more transactions, promote a stable trading ecosystem, and simplify tax compliance for crypto investors.
Additionally, there is a call for the establishment of a dedicated regulatory body to oversee crypto transactions, ensuring transparency and stability in the market. The Reserve Bank of India’s Financial Stability Report highlighted the importance of addressing Decentralised Finance (DeFi) implications for financial stability, emphasizing the need for a robust regulatory framework.
The crypto community remains hopeful that the Ministry of Finance will consider these proposals in the upcoming Union Budget, as they believe that a supportive regulatory environment is crucial for stimulating innovation and transforming businesses through blockchain technology integration.