The Indian crypto industry is keenly awaiting the Budget 2025 as it expects it to be different for the sector, which has had a tumultuous year. A lot happened in 2024, including the $230-million WazirX hack that left millions of users clueless on their fund recovery even as global markets saw a crypto rally.
While retail investors in India still remain undecided on their distrust of the sector and trading in the ongoing bull run, industry players have reached out to the government recommending reduction in virtual digital asset (VDA) taxes, bringing clarity on regulations to protect consumers’ interests and taking measures to make Indian Web3 ecosystem competitive.
What industry wants
Dilip Chenoy, chairman of industry body Bharat Web3 Association (BWA), which represents most crypto exchanges such as WazirX, Coinbase, CoinSwitch and CoinDCX want taxes to be cut.
“Web3 has the potential to revolutionise business models, democratise financial access, and drive digital innovation. To fully harness this potential, a rationalised taxation framework for VDAs is essential. We are hopeful that there will be a reduction in the TDS rate to 0.01 percent, allowing loss offsets and standard deductions for Web3 businesses, and taxing capital gains as per individual income slabs,” Chenoy said.
“Additionally, raising the TDS threshold to Rs 5,00,000, amending Section 206AA for lower rates, and enabling NIL deduction certificates under Section 197 will align taxation policies with the unique needs of this dynamic sector, driving innovation and economic growth."
At present, taxes implemented on VDAs include a 30 percent tax charged on income from crypto and other digital assets and 1 percent tax deducted at source (TDS) added on every crypto transaction of Rs 10,000 in India.
Several of WBA’s members including CoinDCX, CoinSwitch and Mudrex echoed similar sentiments with regards to taxation.
According to world’s largest exchange Binance, the VDA sector stands at a pivotal moment, marked by Bitcoin surpassing $100,000 recently and a surge in institutional investment through instruments like exchange-traded funds (ETFs), crypto credit and debit cards.
“With these developments, there is an opportunity for India to introduce progressive measures in the upcoming Budget that can positively impact the industry, reinforcing India’s leadership in the global digital economy. We strongly believe that a balanced regulatory framework is key to unlocking the full potential of the VDA space in India,” said Vishal Sacheendran, Head of Regional Markets, Binance.
India has the opportunity to establish itself as a global hub for Web3 and blockchain adoption. “By fostering an ecosystem that supports blockchain-based technologies, the country can attract global talent and investment, while also creating local job opportunities in emerging sectors. We also anticipate measures that will clarify taxation on VDA, encourage responsible investing, and support the mainstreaming of digital currencies,” he said.
Binance re-entered India in 2024 after being briefly blocked in the country for not registering and adhering to local money laundering laws.
Regulations, fair treatment for VDAs
Most crypto founders raised concerns about high taxes and regulatory disparities between VDAs and other asset classes, which have discouraged retail investor participation in the sector.
CoinSwitch co-founder Ashish Singhal said bringing down tax slabs and reducing TDS to 0.01 percent would protect small investors and traders from undue tax burdens, ensuring fair treatment across the board.
“We advocate for aligning the taxation of VDA income with other asset classes and removing the current discriminatory treatment. Allowing taxpayers to set off or carry forward losses, as permitted under capital gains provisions, would establish parity and create an environment for innovation,” he said.
“The 1 percent TDS on crypto transactions led many investors and traders to turn towards foreign exchanges, making it harder for the government to track activity,” Edul Patel, co-founder and CEO of Mudrex, concurred.
Sumit Gupta, Co-founder and CEO, CoinDCX, said, “Comprehensive regulations, including a licensing framework, are essential to protect consumers and foster innovation. India can learn from global examples like Singapore and Switzerland to strike a balance between regulation and growth. The upcoming budget is a critical opportunity to address these challenges and strengthen the domestic crypto ecosystem.”
So far, the government has maintained its stance for the crypto regulations to be global in nature, led by a common global regulatory framework which is already in works with other G20 nations.
In September 2023, a synthesis paper was released jointly by the International Monetary Fund (IMF) and G20’s Financial Stability Board (FSB), ruling out the earlier fears of a possible ban on the crypto globally.
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