Indian Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on February 1. FM will present the country’s income and expenditure plans along with new announcements for the crypto community of India. Notably, in the Union Budget 2022, the Finance Minister announced a crypto tax policy. The government introduced the policy under the newly introduced Section 115BBH of the Income Tax Act. With it, the government levied a 30% tax on cryptocurrencies in addition to a 1% TDS.
However, the crypto tax policy didn’t have a positive impact on the Indian crypto community. According to a study conducted by the Esya Centre and Taxsutra, domestic cryptocurrency startups shifted nearly INR 32,000 crore in transaction volume to overseas crypto exchanges between February and October 2022.
Crypto Tax in India: What is the Crypto Community Saying?
Cryptocurrency firms have reportedly requested that the government implements rationalized taxation policies ahead of the Union Budget 2023. Punit Agarwal, Founder of KoinX, believes that a systematic regulatory framework will provide more clarity and some relief. In a public statement, he said,
“We indeed hope for the best in lieu of everyone’s interest as crypto is advancing for regulation to support transparent investigations.”
As stated earlier many investors have chosen to trade their assets on foreign exchanges without a system to deduct 1% TDS. They chose this path to protect their investments from the massive crypto tax imposed by the government. The high proportion of these transactions was unexpected by the authorities.
Also Read: Crypto Exchanges In India Lose Billions Since Tax Regulations: Report
Bharat Web3 Association (BWA) has written to the finance ministry. This newly formed cryptocurrency and web3 industry body expressed its concerns in the letter. It further recommended taxation and regulatory uncertainty in advance of the Union Budget 2023-24. Tarusha Mittal, chief operating officer (COO) and co-founder, UniFarm and Dapps, said,
“Bharat Web3 Association (BWA) has recommended that Sitharaman should highlight the impact of existing tax provisions such as TDS, tax on income from virtual digital assets (VDAs), and not allow carrying forward of losses on the wider industry.”
According to experts like Purushottam Anand excessive crypto tax after the Union Budget 2022 has significantly dampened customer interest. Crypto tax has further triggered a mass exodus of Indian crypto projects to other jurisdictions. Anand, the founder of Crypto Legal stated,
“The government introduced crypto taxation last year as a policy tool to maintain status quo and to discourage retail investors from entering crypto space till a regulatory framework is introduced.”
Also Read: Is Bitcoin (BTC) Price Gunning For $35,000 In Coming Months?
During the monsoon session of parliament in July 2022, FM stated that global collaboration can implement a common taxonomy standard on crypto. Now the Union Budget 2023 will show how much India has proceeded in accepting crypto.
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