Indian Crypto Industry Calls for Budget 2024 Reforms to Boost Growth and Innovation

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• Ashish Singhal, Co-founder of CoinSwitch, emphasized the importance of supportive regulatory and tax policies for the digital economy.
• Bharat Web3 Association (BWA), has asked the Union finance ministry to reduce the TDS on VDA transfers from the current 1% to 0.01 percent.

The crypto industry in India is hopeful that Budget 2024 will bring changes to support growth and innovation. Experts want a better regulatory and tax environment for the digital economy. The current rules, set over two years ago in February 2022, have had some negative effects. 

Such stringent regulations were set to monitor virtual digital asset (VDA) transactions, discourage speculative trading, and ensure consistent tax revenue. However, recent reports indicate these goals have not been met, prompting calls for urgent reform.

The 1% TDS introduction led to a significant drop in trading volumes and active users on Indian VDA exchanges. A report showed that from February 2022 to January 2024, trading volumes fell by 97%, and active users decreased by 81%.

In an interaction with India Today, Ashish Singhal, Co-founder of CoinSwitch, emphasized the importance of supportive regulatory and tax policies for the digital economy. According to him, the current taxation framework has led to unintended consequences even for the government and the exchequer, primarily via a massive shift in VDA transactions to offshore platforms, impacting the tracking and tracing of such transactions.

Singhal also believes that it’s a good time to revisit the tax rules for VDAs in the July 2024 Union Budget. He proposed reducing the TDS rate on VDA transfers from 1% to 0.01% under Section 194S. This change aims to include more VDA transactions under tax regulations, enhance tax compliance, and stop capital flight.

Furthermore, a body representing the crypto and Web3 industry, Bharat Web3 Association (BWA), has recently asked the Union finance ministry to reduce the TDS on VDA transfers from the current 1% to 0.01 percent. The body has also requested a review of the 30% flat tax rate on income from VDA transfers.

The new Indian government, led by Prime Minister Narendra Modi, will present the Union Budget on July 23.

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