Ahead of the upcoming budget announcement for 2024, the Indian web3 community has come together in unison to demand relief over tax rules concerning crypto. For the last two years, the Indian government has paid no heed to the sentiment of the Web3 community, that has been urging for a revision on crypto-related tax laws. Several from the sector have blamed these tax laws as obstructions against crypto growth in India while also leading to a subsequent talent exodus to other, more friendly nations.
Nirmala Sitharaman, the union finance minister of India, will be reading out the budget provisions for the year of 2024-2025 on February 1. Ahead of this, the Web3 community of India have hit social networking platforms with the hashtag — ‘#ReduceCryptoTax’.
A total of three demands are being extended to the Indian government by the crypto sector through social media. These are – flexible tax slabs, reduction of TDS from one percent to 0.01 percent on each crypto transaction, along with the allowance of carrying forward the losses – like stocks.
Sathvik Vishwanath, the CEO of Indian crypto exchange Unocoin recently noted in a tweet that it has been 724 days already since the crypto community has been reeling under the tax pressure. Seeking a fair angle to regulating the sector, Vishwanath noted that “The regulators and policy makers need to make sure that the local rules and policies from time-to-time balances between innovation, taxation and future global prospect.”
The #ReduceCryptoTax trend, at the time of writing, is garnering an overwhelming support on India’s social media landscape. Several creatives are floating all over the internet showing Indian citizens holding #ReduceCryptoTax slogan boards. Videos of people saying that India’s crypto tax laws has snatched the ease of doing business in this sector when a different and friendlier approach could usher a substantial capital inflow for the country
Starting July 2022, India levied one percent tax deductions on each crypto transaction. This essentially means that one percent TDS is being levied on every step around the purchase, trade, and deposit of crypto assets. In addition, Indian crypto holders also have to pay a 30 percent tax on all crypto profits.
As per a recent report by Esya Centre, Rs. 350,000 crores worth of virtual digital assets were traded by Indians on offshore platforms between July 2022 and July 2023 — accounting for more than 90 percent of the total VDA trade volume by Indians. Meanwhile, a Divly report had claimed last year that only 0.07 percent of Indian crypto owners actually declared and paid their taxes in the year of 2022. India’s crypto tax rules have time and again been criticised by the crypto community for hindering the growth of the sector with financial pressure – but the government has remained deaf in-terms of addressing these outcries.
The government of India is currently in the process of creating a bunch of new rules and regulations for the Web3 industry. The aim is to safeguard the industry against exploitation and to secure investors against risks linked to the volatile sector. Despite India’s gradual approach towards somewhat acknowledging the sector, the RBI has remained strictly against introducing crypto-related activities into India’s existing financial system.
It’s only a matter of days before Indians get fresh updates around engaging with the crypto industry.