Here’s why India held on to older crypto reforms in national budget 2023

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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. How­ev­er, dur­ing the ses­sion, the min­is­ter didn’t men­tion cryp­to, cen­tral bank dig­i­tal cur­ren­cy, or blockchain tech. 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 from 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 drove cryp­to traders to off­shore exchanges and 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 much more clar­i­ty. He said, “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.

Push­pen­dra 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, the co-founder and CEO of Indi­an exchange Uno­coin, told Coin­tele­graph that new income tax laws for cryp­to were trig­gered only 10 months ago. More­over, TDS is being applied only for sev­en months, and thus, the gov­ern­ment needs 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 the absence of cryp­to in the union bud­get could be India’s focus on tak­ing a glob­al approach to cryp­to reg­u­la­tions, espe­cial­ly a com­mon tax­on­o­my. In July 2022, the finance min­is­ter sought an inter­na­tion­al col­lab­o­ra­tion from G20 mem­bers to bring a com­mon stan­dard for cryp­to at a glob­al level.



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