As the global digital currency industry undergoes various levels of adoption and regulatory oversight, this omission highlights the stark contrast of the Indian approach to managing these digital assets.
The release of India’s Union Budget for 2024-25 has left a significant portion of the country’s population pondering the implications of the budget, particularly for the crippled cryptocurrency community. Presented by Finance Minister Nirmala Sitharaman on July 23, the budget failed to address the digital currency industry, despite earlier speculation and expectations of possible regulatory clarity and support.
2022 Tax Status Quo Continued: Community Responses
The budget outlined nine priorities for economic growth, such as agriculture and employment, but not virtual currencies. This absence is seen as a failure to create an innovation-generating and attractive regulatory framework for investment in a rapidly evolving space.
Furthermore, while important changes were proposed in the budget, such as the elimination of the angel investor tax for startups and an adjustment to the clearing tax, none of these changes were reflected in the case of digital currency assets, leaving the existing digital currency tax framework unchanged.
The absence of anything in the budget for digital currency has left the Indian digital currency community shocked and concerned. High-profile individuals such as developer Vijay Saran recently took to X to express his concerns about the plan, which does not even mention digital currency:
“There is not even a single mention of Crypto in the #unionbudget2024. The Indian government did not mention anything related to cryptocurrencies in the union budget 2024-25, which means Tax on Crypto transactions and TDS is unchanged: 30% TAX and 1% TDS.”
Saran said that the absence of any mention of the digital currency market in the budget suggests that the status quo of 30% tax on crypto transactions and an additional 1% withholding tax (TDS) will continue from 2022. It should be noted that these tax measures are among the strictest in the world, which significantly affects the operational dynamics of digital currency exchanges and investors in the country.
X user @Mysteryofcrypt echoed Saran’s concerns noting that there is “No #Crypto mention in 🇮🇳 Union Budget 2024-25. This is seriously wrong. Nothing was said in the last budget session, and again, no mention of #crypto in this one.”
Likewise, Subbham Datta posted on X that there was “Another budget session for India, and still NO mention of #Crypto. We need reduced crypto tax to encourage adoption of cryptocurrencies in India.”
Impact of the Cryptocurrency Tax in India
The harsh tax regime has already had a crippling effect on the digital currency market in India. According to the National Academy of Legal Studies and Research (NASLAR), since the introduction of these taxes, trading volumes on Indian exchanges have plummeted by 97% and active user participation has fallen by 81%.
NASLAR found that these reductions are hurting the digital currency space and resulting in significant losses to the exchequer, estimated at 59 billion Indian rupees ($700 million) annually. In contrast, a study published by NASLAR suggests that capping TDS on cryptocurrencies at 0.01% would result in the government collecting twice as much from the industry.
By Audy Castaneda
