Indian finance minister ignores crypto industry’s budget tax plea

Indian Finance Minister Nirmala Sitharaman did not mention cryptocurrency in her 2024 Union Budget statement, leaving existing tax policies in place. The poor performance of the Indian cryptocurrency business has attributed to local proponents of lowering the 1% tax deducted at source (TDS) to 0.01%.

However, India’s current crypto taxation policies remained untouched during Tuesday’s budget presentation, the first since Prime Minister Narendra Modi elected for a third term. Sathvik Vishwanath who is the CEO of local exchange Unocoin, stated that the government’s decision to maintain tax rates indicates that it does not yet consider cryptocurrencies to be a serious industry in India.

They imposed a 1% TDS on transactions and a 30% flat tax on cryptocurrency revenues, as announced in Sitharaman’s 2022 Budget address. and the most severe tax regime in the world, this one is thought to be the cause of the sharp decline in trading volumes on local markets.

Impact of Tax Measures on Indian Cryptocurrency Exchanges

According to a survey by the National Academy of Legal Studies and Research, trading volumes in Indian exchanges plummeted by 97% after the tax measures implemented, and the number of active users fell by 81%. According to NASLAR’s analysis, the national treasury is losing out on tax revenue worth about 59 billion Indian rupees ($700 million) as a result of decreased trading activity on India’s top exchanges.

However, if the cryptocurrency TDS cut to 0.01%, its profits might double. Sitharaman suggested lowering the transaction costs for e-commerce businesses from 1% to 0.01%, but the crypto industry left in suspense. The industry had asked for a tax reduction, and Sitharaman expected to turn him down given the government’s repeated warnings about the risks associated with cryptocurrency trading

First off, the country’s national bank, the Reserve Bank of India (RBI), has a history of opposing cryptocurrencies. The RBI forbade financial institutions from providing services to the cryptocurrency business in 2018, but in 2020, the Supreme Court reversed the decision.

Vishwanath who is a member of RBI, continues to think that speculative motives rather than economic value drive the speculative nature of crypto assets. The local business community wishes for a decrease in the high municipal taxes. Users have cautioned by the RBI whose opinion has not altered in more than ten years about the speculative nature of cryptocurrency assets. India is still the world leader in the adoption of cryptocurrencies despite these obstacles.