India’s Finance Minister Nirmala Sitharaman presented a comprehensive budget for the fiscal year 2024-2025, following the interim budget introduced on February 1, 2024, in preparation for the upcoming elections scheduled between April and June. In her budget speech, she announced that the crypto tax rules would remain unchanged, a decision that was in line with expectations as reported by CoinDesk earlier.
The crypto industry in India had been eagerly awaiting potential revisions to the tax regime, particularly in relation to the controversial tax-deducted-at-source (TDS) policy on crypto transactions. The industry had lobbied for a reduction of the TDS rate from 1% to 0.01%, citing various studies and evidence to support their case. Additionally, they had requested for a shift towards progressive taxes on gains instead of the current flat rate of 30%, as well as provisions to allow for losses to offset gains. Furthermore, there were calls for a multi-agency regulatory framework to govern the sector.
Despite the industry’s hopes for a more favorable taxation framework for Virtual Digital Assets (VDAs), the absence of any changes in the budget announcement was not entirely unexpected given the government’s cautious approach towards the sector. Dilip Chenoy, Chairperson of the Bharat Web3 Association, expressed the industry’s sentiments, stating that they would continue to advocate for a more rationalized tax structure in the future.
One notable change in the budget was the increase in long-term capital gains tax from 10% to 12.5% and short-term capital gains tax from 15% to 20%. The implications of these changes on crypto trading remain uncertain and will require further analysis.
This budget holds significance as it marks the first financial plan under Prime Minister Narendra Modi’s third consecutive term. With the Bharatiya Janata Party (BJP) falling short of a majority in the recent elections, the formation of a coalition government has introduced certain constraints that could influence policy decisions.
As the country looks ahead to the next five years, the budget serves as a roadmap for Prime Minister Modi’s vision, taking into account the evolving political landscape and the unexpected election outcomes. It remains to be seen how the government’s decisions, including the unchanged crypto tax rules, will shape the future of the crypto industry in India.