Last year during Union Budget, Finance Minister Nirmala Sitharaman had announced the imposition of a 30% tax on unrealised gains and a one percent tax deduction at the source (TDS) on all income derived from cryptocurrency trading. Meanwhile, as per a recent report by KuCoin, a cryptocurrency exchange, nearly 115 million cryptocurrency users represent around 15% of the Indian population aged between 18-60 years.
Now as the Union Budget is round the corner, cryptocurrency players call for taxes imposed so far to be rationalised. They feel the central government should rationalise the 30% tax to foster a thriving information technology and Web3.0 ecosystem that will drive innovation and growth in the country.
Earlier in July 2022, Finance Minister stated that there is a need for global collaboration to implement a common taxonomy standard on cryptocurrency. The cryptocurrency sector needs support from the regulators for creating a business-friendly environment that will enable the growth of blockchain companies in India. Furthermore, in 2018, the RBI forbade banks from providing services to cryptocurrency firms. However, the ban was overturned by the apex court in 2020.
As per market analysts, Web3.0, cryptocurrency assets, non-fungible tokens (NFTs), and the metaverse require a separate bill for other regulatory matters. Bharat Web3 Association (BWA) has recommended that Sitharaman should highlight the impact of existing tax provisions such as TDS, tax on income from virtual digital assets (VDAs), and not allow carrying forward of losses on the wider industry.
