News
India keeps controversial crypto tax rules unchanged in annual budget
Indian Finance Minister Nirmala Sitharaman kept crypto tax rules unchanged in her speech Tuesday announcing the national budget for 2024-2025. This was expected, as CoinDesk reported on Monday.
The Indian cryptocurrency industry’s main demand was to reduce the controversial withholding tax (TDS) policy on cryptocurrency transactions from 1% to 0.01%. It submitted its claims to government officials with evidence from several sources, including a think tank study that provided evidence to support a reduction in the TDS.
The industry too asked the government to establish progressive taxes on earnings instead of the flat 30% rate, and allow losses to offset gains. They also pushed for multi-agency regulation.
“We were hoping for some relaxation in the tax framework on VDAs (Virtual Digital Assets) in this fiscal, but the absence of any announcement is not particularly discouraging given the government’s overall negative stance towards the sector,” said Dilip Chenoy, president of the Bharat Web3 Association, adding that they would “continue to push for rationalisation of the tax framework”.
Specifically, the government has increased the long-term capital gains tax from 10% to 12.5% and the short-term capital gains tax from 15% to 20%. It is unclear whether this will have an impact on cryptocurrency trading.
The budget is the first since Prime Minister Narendra Modi was elected to a third consecutive term. Modi’s Bharatiya Janata Party (BJP) failed to secure a majority in this year’s elections, pushing them to form a coalition government, together with the limitations that result from it.
This budget is seen as a roadmap for his vision for the next five years, which will take into account the sentiment reflected in the unexpected election results.
UPDATE (July 22, 07:54 UTC): Adds sentence to previous CoinDesk report. Adds quote from industry policy body and details on capital gains tax change.