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As Finance Minister Nirmala Sitharaman gears up to present the Interim Budget 2024-25 on February 1, 2024, the Indian cryptocurrency community is eagerly awaiting potential developments. The preceding year, 2023, brought forth challenges for crypto companies in India, notably the imposition of a 1% Tax Deducted at Source (TDS) on Virtual Digital Asset (VDA) transactions. Let’s see what the key expectations of the crypto community are from this year’s budget.
Key Expectations from Budget 2024
Reduction in TDS Rate
The crypto community is fervently hoping for a significant reduction in the TDS rate from 1% to 0.01%. This adjustment is seen as pivotal for creating a more level playing field within the cryptocurrency space, eliminating concerns of regulatory and tax arbitrage for all participants.
Offsetting Losses Against Gains
A crucial expectation revolves around the allowance to offset losses against gains in cryptocurrency transactions. This measure aims to establish a fair and equitable environment, fostering growth and innovation among participants.
Re-evaluation of Regulatory Framework
Cryptocurrency companies are urging the government to reconsider and refine the regulatory framework for Virtual Digital Assets (VDAs). The emphasis is on achieving clarity and stability, particularly in the classification and taxation of these assets.
Aligning Tax Rates with Other Assets
The industry is calling for the treatment of income from VDAs on par with other capital assets. This alignment is anticipated to contribute to a more coherent and consistent taxation structure for cryptocurrencies, ensuring fairness among market participants.
Creation of Special Economic Zones and Tax Holidays
There is a suggestion within the crypto community to create special economic zones for Web3 startups and provide tax holidays during their initial years. This proposal aims to encourage innovation and product development, supporting entrepreneurs without impeding cash flows.
Investments in R&D Initiatives
The community calls for targeted investments in research and development (R&D) initiatives focused on digital asset security and compliance. This commitment is expected to empower Indian companies to contribute significantly to global solutions.
Global Regulatory Alignment
Regulatory measures that align with global standards could enhance the international credibility of the Indian crypto industry. Harmonizing regulations could facilitate cross-border transactions and collaborations.
Education and Awareness Programs
The government’s support in initiating educational programs to enhance awareness and understanding of cryptocurrencies among the public, policymakers, and financial institutions can help the industry flourish. This can contribute to a more informed and accepting ecosystem.
Legal Framework and Exchange Licensing
The crypto community emphasizes the need for a well-defined legal framework that addresses taxation complexities and provides clear guidelines for income and transactions. Exchange licensing protocols should be viewed as a means to ensure responsible participation rather than as hurdles.
Conclusion
As the Indian crypto community eagerly awaits Budget 2024, the overarching expectations center around creating a supportive regulatory environment, aligning tax structures, and fostering innovation. The decisions made in the budget hold the potential to significantly shape the trajectory of the cryptocurrency industry in India, paving the way for responsible growth and increased participation among diverse stakeholders.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
