Here's why India held on to older crypto reforms in national budget 2023
Cryptocurrency and blockchain technology found no mention in India’s union budget for the year 2023, bringing down the hopes of millions of crypto holders in the country. Many in the Indian crypto community were hoping for some reduction to the high crypto tax, implemented in March 2022.
Indian finance minister Nirmala Sitharaman presented the union budget on Feb. 1, announcing key changes to the income tax slabs, but didn’t mention crypto or central bank digital currency or blockchain tech during the session. Last year, India levied a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all crypto transactions, derailing a thriving industry almost immediately.
The primary motive for introducing a TDS on all crypto transactions was to determine the total number of Indian citizens actively using cryptocurrencies. This data will be made available to the government as Indians file income tax returns (ITR) starting in May 2023.
Trading volume on major cryptocurrency exchanges across India dropped by 70% within 10 days of the new tax policy, and almost 90% in the next three months. The rigid tax policy not only deterred crypto traders to move to offshore exchanges but also forced budding crypto projects to move outside India.
Related: Tax man: India’s new tax policies could prove fatal for the crypto industry
Former finance secretary of India Subhash Chandra Garg had noted earlier that crypto taxes need a lot more clarity, “we might not see any new changes in the upcoming budget 2023.” Chandra also served as the chairman of the committee that drafted the first crypto bill.
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The former Finance secretary of India Mr Subhash Chandra Garg says “Crypto taxes need a lot more clarity & he might not see any new changes in the upcoming budget 2023”.
What are your thoughts? pic.twitter.com/eVXE0sC6Pl
— KoinX (@getkoinx) January 30, 2023Pushpendra Singh, a tech entrepreneur and a blockchain influencer, believes the government is still waiting on the report from the committee it had formed earlier and said:
“The finance minister has not announced anything related to crypto tax because the government is waiting for the committee reports as per my understanding. The Indian government has made one committee to study crypto.”Sathvik Vishwanath, CEO and co-founder of Indian exchange Unocoin, told Cointelegraph that new income tax laws for crypto were triggered only 10 months ago; moreover, the TDS is being applied only for 7 months and thus the government need more time. He explained:
“The Indian government needs to have enough data for an extended period of time, say 1-2 full financial years, to analyze and make amendments as necessary. Hence no significant news was expected on the crypto industry anyway. We may expect some amendments in due course or during the next budget."Another factor for crypto not finding a place in the union budget could be India’s focus on taking a global approach to crypto regulations, especially a common taxonomy. Earlier in July 2022, the finance minister sought a global collaboration from G20 members to bring a common standard for crypto at a global level.