What is the crypto industry expecting from Budget 2024?

16 views 8:04 am 0 Comments February 7, 2024
The trajectory of cryptocurrency adoption and regulatory frameworks has witnessed significant milestones. From initial notices and legal repercussions for participants in 2020 to 30% taxation on gains today, the industry has evolved a long way. As we approach the Interim Budget 2024, the crypto industry anticipates with earnestness that the government will address the prevalent challenges, signalling a critical juncture for the sector.
Four Important ConcernsDespite the Government Of India’s commendable efforts to nurture innovation and responsible growth in the crypto space, there are four concerns within the existing taxation framework that require attention.
First, the need for a clear distinction in tax treatment between long-term and short-term capital gains is paramount. This differentiation would promote the utilisation of cryptocurrencies as a viable long-term wealth-building tool.

Secondly, a critical concern lies in the taxation of investors based on their respective income brackets rather than opting for a uniform 30% tax rate. This approach seeks a fairer and more nuanced taxation structure reflective of individual financial circumstances.

Thirdly, an essential consideration is the allowance for offsetting crypto losses against gains. This adjustment aims to create a more equitable tax framework, aligning with practices applicable to other asset classes and mitigating potential disincentives for investors.Lastly, a significant concern revolves around the current Tax Deducted at Source (TDS) rate of 1%. Advocating for a reduction to a more manageable rate, this proposition seeks to strike a balance between regulatory oversight and fostering a thriving crypto ecosystem.

Way Forward

India has positioned itself as a global leader in the grassroots adoption of cryptocurrencies. The growing community of crypto enthusiasts, developers, and entrepreneurs emphasizes the sector’s potential to significantly contribute to the country’s economic growth. Hence, as the government shapes the budget for 2024, whether interim or full, it is crucial to establish a regulatory framework that not only safeguards the interests of investors but also nurtures an environment conducive to the flourishing of the crypto industry.
Addressing these concerns is not just about regulatory compliance; it is about acknowledging the evolving nature of finance. By embracing a forward-looking approach, the government can position India as a global hub for crypto innovation, attracting talent and investment, and paving the way for a resilient digital economy.

Conclusion

The government’s proactive measures in the previous budgets underscore a commitment to fostering innovation and responsible growth. The industry’s expectations, centered around a reduction in the TDS rate and the ability to offset losses, align with the need for a balanced and adaptive regulatory framework.
As the crypto landscape continues to evolve, a collaborative and forward-thinking approach will be instrumental in shaping a vibrant and sustainable future for the sector in India. The government’s actions in Budget 2024, be it interim or full budget, will not only shape the future of the crypto industry but also play a crucial role in defining India’s position in the global digital economy.

The author is CEO & Co-founder of Mudrex

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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