Budget FY24: Despite industry’s demand, Centre unlikely to soften stance on crypto tax | The Financial Express

Budget FY24: Despite industry’s demand, Centre unlikely to soften stance on crypto tax

Finance minister Nirmala Sitharaman had in the Budget FY23 announced a scheme for taxation of virtual digital assets,

Budget FY24: Despite industry’s demand, Centre unlikely to soften stance on crypto tax
The Reserve Bank of India has consistently made its opposition to cryptocurrencies clear. (IE)

By Surabhi

The Centre is unlikely to soften its stand on on taxation of virtual digital assets even as the industry is hoping for a review on the 1% TDS provisions in the Union Budget 2023-24. According to sources, the tax provisions on virtual digital assets came after a lot of thought and discussion and do not require a review.

“The tax provisions were brought about based on the large number of transactions and investments, and the need to monitor them. As of now, it is not felt that any review or rollback is needed,” said a person familiar with the development.

Finance minister Nirmala Sitharaman had in the Budget FY23 announced a scheme for taxation of virtual digital assets, which includes a 30% tax on income on transfer of these assets, no offsetting of loss from transfer of these assets and a 1% TDS on payment made in relation to transfer of these assets.

However, the cryptocurrency industry, which has witnessed a tumultuous year with global volatility and troubles at various exchanges, believes that the tax scheme, particularly the 1% TDS, has made many investors move to foreign exchanges.

The industry has sought that the 1% TDS is lowered to 0.01% as well as a review of other provisions.

Kiran Vivekananda, chief of public policy and government affairs, CoinDCX, said, “As an industry, through our industry body Web3Bharat, we have requested the government on three issues: Reduction of the 1% TDS to 0.01%, review of the 30% rate of tax and offsetting of losses as this is not allowed. The new tax regime of virtual digital assets does not seem to have discouraged users from investing in virtual digital assets.”

While Indian exchanges have registered a reduction in trading volume by 90%, foreign exchanges have facilitated many Indian investors, he further said, pointing out that these exchanges do not comply with KYC or any Indian laws and there is no traceability of wealth moving around.

Also read: Budget 2023: Pre-budget meetings with FM conclude with suggestions on ‘green’ certification of MSMEs, more

Cryptocurrency Bill:

Meanwhile, the Centre is unlikely to move ahead with the Cryptocurrency Bill in Parliament in the upcoming Winter Session beginning next month.

Sources indicated that the Bill still requires more debate and discussion given the complexity of the issue and its implications. The government had initially listed the Cryptocurrency and Regulation of Official Digital Currency Bill for introduction in the Winter Session in 2021.

The Reserve Bank of India has consistently made its opposition to cryptocurrencies clear. It is expected that more thought and a possible decision on regulating these assets may be taken up during India’s presidency of the G-20.

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First published on: 29-11-2022 at 05:00 IST