Crypto industry seeks conducive tax environment

BENGALURU: The first half of this year was a significant one for the crypto industry ­– Bitcoin touched its peak of over $73,000 in March, Bitcoin Halving, US SEC granted approval for spot Bitcoin ETFs. All these have driven increased trading activity in the Indian crypto market, and crypto exchanges hope that the upcoming Budget will create a conducive regulatory and tax environment.

“The current taxation framework for virtual digital assets (VDAs), introduced over two years ago in February 2022, has led to unintended consequences even for the government and the exchequer, mainly via a shift in VDA transactions to offshore platforms, impacting tracking and tracing of such transactions.

We believe with a new government in place, and to capitalise on India’s Web3 opportunity, a relook at the tax treatment on virtual digital assets in the July 2024 Union Budget will be very timely,” said Ashish Singhal, co-founder, CoinSwitch.

The exchanges have been seeking to lower the rate of TDS on transfer of virtual digital assets from 1% to 0.01%. “Allow the offset of losses similar to other sectors to encourage responsible trading practices and reduce the risk of tax evasion. Re-examine the flat rate of 30% applicable to income from the transfer of virtual digital assets to ensure parity with other tech-enabled sectors,” Singhal added.

Raj Karkara, chief operating officer, ZebPay, said regulatory clarity is one of the most crucial steps towards creating a secure and transparent investment ecosystem for all stakeholders.