Regulation
Budget 2024: Crypto Experts Promote Lower TDS, Regulatory Clarity
The cryptocurrency sector in India is hoping for changes that will foster growth and innovation from Budget 2024. Industry experts have expressed their expectations, calling for a regulatory and tax environment that is better supportive the booming digital economy.
The current regulatory framework, introduced more than two years ago in the February 2022 budget, has led to some unintended consequences, shifting transactions to offshore platforms and making them harder to track and trace.
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Ashish Singhal, co-founder of CoinSwitch, stressed the need for a favorable regulatory and tax environment.
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He said: “We urge them to create an enabling regulatory and tax environment that supports the thriving digital economy and fosters innovation. The current tax framework for Virtual Digital Assets (VDA), introduced over two years ago in the February 2022 budget, has also led to unintended consequences for the government and the exchequer, primarily through a massive shift of VDA transactions to offshore platforms, impacting the monitoring and traceability of such transactions.”
Singhal believes that it is appropriate to review the tax treatment of VDAs in the Union Budget of July 2024.
It suggested lowering the TDS rate on VDA transfer from 1% to 0.01% under Section 194S, with a view to bringing most VDA transactions under the tax control mechanism, improving tax compliance and preventing capital flight.
“Allow loss offsetting similar to other sectors. This would encourage responsible business practices and reduce the risk of tax evasion. The flat rate of 30% applicable to income from VDA transfer should be reviewed to ensure parity with other technology-enabled sectors,” Singhal said.
Raj Karkara, COO of ZebPay, shared similar sentiments, emphasizing the importance of 2024 for the cryptocurrency industry.
He said, “2024 is shaping up to be a significant year for the cryptocurrency industry. We have seen the approval of Spot Bitcoin ETFs and the ongoing approval of Ethereum ETFs in the US, as well as the recent ‘Bitcoin Halving’, a monumental event for the Web3 and cryptocurrency ecosystem. Along with this, SEBI’s stance on having multiple regulators overseeing the cryptocurrency sector has generated anticipation within the industry. These are indicators that show the wider acceptance of cryptocurrencies as an asset class.”
Karkara stressed the importance of regulatory clarity to create a safe and transparent investment ecosystem.
“Regulatory clarity is one of the most important steps towards creating a safe and transparent investment ecosystem for all stakeholders,” he said.
He expressed hope that Budget 2024 would propose a collaborative approach between the government and the wider Web3 industry.
Following the positive developments at the G20 summit last year, he believes that a comprehensive regulatory framework is needed. He also advocates for reducing TDS and capital gains taxes to create a more inclusive ecosystem and enable more investors to actively participate.
Clear regulation, he said, would not only spur innovation but also enable the industry to fully explore the potential of blockchain, bringing about transformative change and fostering the country’s financial independence.
Published on:
July 16, 2024