With the Union Budget 2023-24 upon us, crypto start-ups in India expect the government to infuse fresh life into the struggling sector with some friendly policies. Among the top expectations it has this year from Finance Minister Nirmala Sitharaman are a proper regulatory framework for homegrown crypto exchanges, more clarity on the impending Crypto Bill, some relief on crypto taxation (which stands at 30 per cent now), and an overall favourable environment for blockchain and Web3 companies to flourish in the country.
The sector also hopes that the government would allow crypto investors to offset and carry forward their losses to create a level-playing field for virtual digital assets (VDAs) in India. Crypto bosses further expect the TDS exemption limit to be raised “to a reasonable level”.
Shivam Thakral, CEO of BuyUcoin, among India’s oldest crypto exchanges, said: “We are delighted to see that our honourable FM is actively involved in creating a global consensus for policy around crypto, but Indian crypto entrepreneurs are looking forward to a fast-track implementation of the regulatory framework for crypto exchanges. Such positive steps will encourage responsible mass adoption of digital assets and propel India into the next phase of the Web3 economy.”
Although the tax aspect was addressed in previous Budgets, the industry reckons that Web3, crypto assets, NFTs, and the Metaverse require a separate Bill for other regulatory matters.
Tarusha Mittal, Co-founder and COO, UniFarm and Dapps, says, “Recently, the Bharat Web3 Association (BWA) has recommended the FM to highlight the impact of the existing tax provisions such as TDS, tax on income from VDAs, and not allowing carrying forward of losses on the wider industry and share its inputs on suitable amendments, which can help address the concerns of the government and at the same time allow growth of Web3 sector.”
He further added that “the government should frame strong regulations for the sector in light of the FTX crisis [which wiped out billions of dollars in global investor money] especially for centralized bodies dealing with crypto.”
Industry estimates suggest there are nearly 15 million crypto investors in India at present. The country is also home to 11 per cent of the global Web3 talent, employing 75,000+ blockchain professionals, according to NASSCOM. However, crypto trading volumes on domestic exchanges crashed as much as 90 per cent after the introduction of the 30 per cent crypto gains tax in the FY23 Budget. A lot of transactions also moved offshore, which became even more difficult to track.
Mahin Gupta, Founder of Liminal (a digital wallet infrastructure platform), pointed out: “The government took its first step towards regularizing crypto by introducing a formal tax regime for digital assets. That formal tax structure gives institutional investors much-needed clarity and direction to look at digital assets as an alternate asset class. However, the Government should rationalize the 30 per cent tax to foster a thriving IT and Web3 ecosystem that will drive innovation and growth.”
Gupta also stressed on the need for professional digital wallet infrastructure companies “which are regulated, compliant, and licensed to boost the confidence of retail and institutional stakeholders”. “With Institutional investors in the picture, storing digital assets in a secure and compliant way becomes an absolute necessity,” he stated.
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