India’s annual budget announcement, scheduled for February 1, is anticipated to have a significant impact on the country’s cryptocurrency industry. Industry players in the Web 3.0 sector are hopeful for a “level playing field” for virtual digital assets (VDAs), clearer regulations, and government funding for indigenous blockchain projects. The industry’s main requests include a reduction in the 1% tax deducted at source (TDS) on VDA trades and the ability to offset losses with profits.
The imposition of the 1% TDS in April 2022 caused a decline in trading volumes in Indian exchanges, with many traders moving to foreign exchanges. Industry representatives are urging the government to bring the TDS down to 0.01% to encourage digital asset transactions. They are also calling for a reduction in the 30% flat tax on digital currency income and the allowance of loss offsetting, similar to regulations in securities trading.
India’s assumption of the G20 Presidency in 2022 has put digital asset regulation on the country’s agenda. The G20 is a forum of major global economies, accounting for a significant portion of global GDP and international trade. The Indian government is focused on creating a roadmap for crypto regulations in collaboration with other G20 countries.
Industry insiders believe that the budget announcement will lay the foundation for a robust and inclusive digital economy in India. They are requesting incentives and benefits for entrepreneurs and startups working on Web3 and blockchain technologies, as well as specific domestic regulations for greater stability. The allocation of funds for indigenous blockchain projects is also seen as crucial for promoting real-world utility and innovation.
The Indian digital currency industry has faced challenges due to market downturns and regulatory uncertainties. Tax measures introduced in February 2022 led to a significant amount of trading volume moving to overseas exchanges, resulting in a competitive struggle for domestic platforms. It is estimated that India may experience a loss of around $1.2 trillion in trade volume on domestic exchanges in the coming years.
Industry leaders are urging the government to reconsider the tax treatment of virtual digital assets, as it is currently an outlier both domestically and internationally. They also suggest implementing a licensing system for service providers, similar to regulatory frameworks in Dubai and other countries. Such measures would help attract capital, consumers, and investments while curbing the growth of the gray economy in VDAs.
Overall, the cryptocurrency industry in India is hopeful that the budget announcement will bring about positive changes that foster growth, innovation, and stability in the sector.
The source of the article is from the blog jomfruland.net