Cryptocurrency and blockchain technology found no mention in India’s union budget for the year 2023, bringing down the hopes of millions of crypto holders in the country. Many in the Indian crypto community were hoping for some reduction to the high crypto tax, implemented in March 2022.
Indian Finance Minister Nirmala Sitharaman presented the union budget on Feb. 1, announcing key changes to the income tax slabs. However, during the session, the minister didn’t mention crypto, central bank digital currency, or blockchain tech. Last year, India levied a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all crypto transactions, derailing a thriving industry almost immediately.
The primary motive for introducing a TDS on all crypto transactions was to determine the total number of Indian citizens actively using cryptocurrencies. This data will be made available to the government as Indians file income tax returns from May 2023.
Trading volume on major cryptocurrency exchanges across India dropped by 70% within 10 days of the new tax policy and almost 90% in the next three months. The rigid tax policy drove crypto traders to offshore exchanges and forced budding crypto projects to move outside India.
Former Finance Secretary of India, Subhash Chandra Garg, had noted earlier that crypto taxes need much more clarity. He said, “we might not see any new changes in the upcoming budget 2023.” Chandra also served as the chairman of the committee that drafted the first crypto bill.
Pushpendra Singh, a tech entrepreneur, and a blockchain influencer believes the government is still waiting on the report from the committee it had formed earlier and said:
The finance minister has not announced anything related to crypto tax because the government is waiting for the committee reports as per my understanding. The Indian government has made one committee to study crypto.
Sathvik Vishwanath, the co-founder, and CEO of Indian exchange Unocoin told Cointelegraph that new income tax laws for crypto were triggered only 10 months ago. Moreover, TDS is being applied only for seven months, and thus, the government needs more time. He explained:
The Indian government needs to have enough data for an extended period of time, say 1-2 full financial years, to analyze and make amendments as necessary. Hence no significant news was expected on the crypto industry anyway. We may expect some amendments in due course or during the next budget.
Another factor for the absence of crypto in the union budget could be India’s focus on taking a global approach to crypto regulations, especially a common taxonomy. In July 2022, the finance minister sought an international collaboration from G20 members to bring a common standard for crypto at a global level.