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Interim Union Budget 2024: Crypto industry seeks tax relief, setting up of SRO

With Union Finance Minister Nirmala Sitharaman set to unveil the Interim Union Budget 2024 on February 1, anticipation by various industries is high.

Interim Union Budget 2024: Crypto industry seeks tax relief, setting up of SRO

(ANI Photo/Sansad TV)

With Union Finance Minister Nirmala Sitharaman set to unveil the Interim Union Budget 2024 on February 1, anticipation by various industries is high.

In this regard, the cryptocurrency industry is hopeful that the budget will revisit the existing taxation structure on virtual digital assets (VDAs).

The establishment of a self-regulatory body for the crypto and blockchain sectors, as well as the creation of sandboxes to bolster start-ups within the industry are some of the key expectations by the industry leaders.

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It is worth highlighting that the imposition of taxes on crypto transactions had led to a decline in trading volumes on domestic platforms, with many users shifting to offshore exchanges.

However, the recent actions by the finance ministry, including issuing show-cause notices to offshore exchanges and blocking URLs, have provided some relief for domestic crypto exchanges.

According to the reports, the crypto industry leaders are urging the government to reconsider the Tax Deducted at Source (TDS) on VDAs, proposing a reduction from the current 1% to 0.01%.

They also seek the ability to offset and carry forward losses from VDA transactions and advocate for treating income from VDAs on par with other capital assets. The objective is to minimise tax arbitrage, preventing the outflow of capital, investments, and talent while addressing concerns related to the grey economy in VDAs.

A re-evaluation of the flat rate of 30% applicable to income from the transfer of VDAs will also be on cards.

The government should allocate funds for indigenous blockchain projects that demonstrate real-world utility and innovation. It is anticipated that such financial support will further stimulate innovation within the domestic crypto and blockchain ecosystem.

Another key expectation of the crypto leaders is the Self Regulatory Organisation (SRO) framework.

They argue that such an establishment would provide clarity and unlock numerous opportunities and use cases on a global scale, positioning India as a leader in the sector.

To foster growth among startups in the crypto and blockchain space, stakeholders propose the creation of tax incentives and sandboxes.

Recently, the US securities regulator (SEC) approved the first US-listed exchange traded funds (ETFs) to track bitcoin, in a watershed for the world’s largest cryptocurrency and the broader crypto industry.

With the approval of Bitcoin ETFs in the US, Indian investors can add cryptocurrency to their portfolios through the Liberalized Remittance Scheme (LRS) route.

Indian cryptocurrency companies view the SEC’s decision as a positive development for the global crypto industry and express hope for similar discussions with regulators in India.

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