The crypto industry is now looking forward to next year's tax reforms
The recent WazirX hack was a jolt to the crypto sector
Blockchain technology was also not mentioned during the budget speech
Crypto was not mentioned during the interim budget as well
Photo Credit: Facebook/ Nirmala Sitharaman
Finance Minister Nirmala Sitharaman presented the Union Budget for 2024-25 on Tuesday, with a slew of reforms for various sectors. The Budget did not mention cryptocurrencies or blockchain technology, two areas that are currently are unregulated in India. The Web3 sector in India has been urging the government to reduce the one percent tax deducted at source (TDS) on all crypto transactions. The Web3 community, however, continues to vouch for patience and belief in the government for comprehensive industry-specific reforms in the future.
One of the major reasons for disappointment in the crypto sector was due to the lack of reduction of TDS on crypto transactions in India. The industry has repeatedly presented reports to the government, requesting a reduction in taxation.
“We have submitted data-backed quantitative analyses regarding the flight of users' trading and transactions, as well as the potential increase in government revenue should the taxation structure be revised,” the Bharat Web3 Association told Gadgets360. “We will continue to push for rationalisation of the taxation framework, which includes reducing the TDS to 0.01 percent, allowing setoff of losses on VDA transactions and modifying the 30 percent tax on capital gains.”
Members of the crypto industry are trying to rationalise the government's exclusion of crypto-centric reforms from this year's budget. Some have expressed concerns that this could be a silent effect of the recent WazirX wallet exploit, that has led to the theft of over $230 million (roughly Rs. 1,942 crore) from the exchange's reserves.
While clarity on government's crypto outlook remains awaited, the Web3 community has taken respite in the abolishment of the angel tax for all classes of investors. This rule levied taxes on investments that startups received by angel investors, who are wealthy individuals who pour their own capital into startup businesses. This step is aimed at spiking the overall startup ecosystem of India.
As per a report by HashEmergent and KPMG published in April this year, India has over a thousand startups with Bengaluru coming up as a hub. The same report also noted that India's Web3 sector received investments worth $250 million (roughly Rs. 2,092 crore) in 2023.
With the abolishment of this angel tax, the Web3 group expects to see a boom in blockchain-based startups in the coming months.
“We are confident that this will significantly bolster the Indian tech start-up ecosystem, especially in the Web3 sector. As Web3 becomes more mainstream, investment in Web3 startups is expected to increase,” Sumit Gupta, Co-founder, CoinDCX told Gadgets360.
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