Cryptocurrency and blockchain technology were not mentioned in India’s Union Budget 2023, dashing the hopes of millions of cryptocurrency holders in the country. Many in the Indian crypto community were hoping for some reduction in the high tax on crypto, which was introduced in March 2022.
India’s Finance Minister Nirmala Sitharaman presented the Union Budget on February 1, announcing key changes to tax slabs, but did not mention crypto or central bank digital currency or blockchain technology during the session. Last year, India introduced a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all crypto transactions, derailing the thriving industry almost immediately.
The primary motive behind the introduction of TDS on all crypto transactions was to ascertain the total number of Indian citizens actively using cryptocurrencies. This data will be available to the government when Indians file their Income Tax Returns (ITR) starting May 2023.
Trading volume on major cryptocurrency exchanges across India fell by 70% within 10 days of the new tax policy, and by nearly 90% in the following three months. The rigid tax policy has not only deterred crypto traders from moving to offshore exchanges, but has also forced new crypto projects to move out of India.
Related: Taxman: India’s new tax policy could prove fatal for the crypto industry
India’s former finance secretary Subhash Chandra Garg previously noted that crypto taxes need a lot more clarity, “we may not see any new changes in the upcoming 2023 budget.” Chandra also chaired the committee that drafted the first cryptocurrency bill.
Former Finance Secretary of India Mr. Subhash Chandra Garg says that “Crypto taxes need a lot more clarity and he may not see any new changes in the upcoming 2023 budget.”
What are your thoughts? pic.twitter.com/eVXE0sC6Pl
— KoinX (@getkoinx) January 30, 2023
Pushpendra Singh, a tech entrepreneur and blockchain influencer, believes the government is still waiting for the report of the committee it formed earlier and said:
“The finance minister has not announced anything regarding the crypto tax because the government is waiting for the committee reports as I understand it. The Indian government has set up a committee to study crypto.”
Sathvik Vishwanath, CEO and co-founder of Indian exchange Unocoin, told Cointelegraph that the new income tax laws for cryptocurrencies were launched just 10 months ago; moreover, TDS is applicable only for 7 months and hence the Government needs more time. He explained:
“The Government of India needs to have enough data for a longer period of time, say 1-2 full financial years, to analyze and make changes as needed. Therefore, no significant news about the crypto industry was expected anyway. We can expect some changes in due course or during the next budget.”
Another factor why cryptocurrencies did not find a place in the union budget could be India’s focus on a global approach to crypto regulations, especially a common taxonomy. Earlier in July 2022, the finance minister asked for global cooperation from G20 members to bring a common standard for crypto globally.