In her recent hour-long budget speech, Finance Minister Nirmala Sitharaman made no mention of any tax changes, leaving the Indian crypto and Web3 industry disappointed. Despite an ongoing social media campaign with the hashtag #ReduceCryptoTax, the Finance Minister did not address the concerns of the crypto sector in the interim budget presented on February 1.
This omission has led to a sense of neglect among members of the crypto industry, who were hopeful for positive changes in taxation policies. The industry remains optimistic that alterations might be considered in the budget finalized after the general elections later this year.
Rajagopal Menon, Vice President of WazirX, commented on the situation, expressing the belief that crypto and virtual assets could play a crucial role in empowering individuals and contributing to India’s developmental goals. Menon highlighted the potential benefits for digital public infrastructure and research, emphasizing the need for provisions supporting long-term financing of domestic crypto projects. The industry has been pushing for a reduction in TDS rates to 0.01 percent and the ability to offset losses for traders.
The hashtag #ReduceCryptoTax gained significant traction on social media platforms, with thousands of posts demanding a revision in India’s crypto tax policy. In July 2022, India implemented a one percent tax deduction on each crypto transaction and imposed a 30 percent tax on all crypto profits. Industry members argue that this taxation system has led to a decline in crypto-related activities in India, prompting Web3 talent and companies to relocate to more crypto-friendly nations. Some crypto players in India have even announced staff cuts due to a decrease in user engagement and queries related to crypto.
For this budget, the crypto industry had three main expectations: flexible tax slabs, a reduction in TDS from one percent to 0.01 percent on each crypto transaction, and the ability to carry forward losses, similar to stock trading. However, these requests were not addressed in the Finance Minister’s speech, adding to the disappointment within the crypto community.