India Keeps Controversial Crypto Tax Rules Unchanged, Finance Minister’s Budget Speech

Indian Finance Minister Nirmala Sitharaman introduced the interim budget on February 1, 2024, ahead of the country’s elections due to be held between April and June.

He announced the 2024-2025 budget on Tuesday.

Indian Finance Minister Nirmala Sitharaman did not change crypto tax rules during her speech announcing the country’s 2024-2025 budget on Tuesday. This was expected, CoinDesk reported on Monday.

The primary demand of India’s crypto industry was to reduce the controversial tax at source (TDS) policy on crypto transactions from 1% to 0.01%. They submitted representations to government officials with evidence from various sources, including a think-tank study that provided evidence supporting a reduction in TDS.

The industry has also called on the government to introduce graduated taxes on profits, rather than a flat 30% rate, and allow losses to offset gains. They have also pressed for multi-agency regulation.

“We were hoping for some relaxation in the taxation framework on VDAs (Virtual Digital Assets) in this budget, but the absence of any announcement is not particularly disheartening given the government’s overall negative attitude towards the sector,” said Dilip Chenoy, President, Bharat Web3 Association, adding that they will “continue to press for rationalisation of the taxation framework”.

Notably, the government increased long-term capital gains tax from 10% to 12.5% ​​and short-term capital gains tax from 15% to 20%. It is unclear whether this will have any impact on crypto trading.

“The increase in Long Term Capital Gains Tax from 10% to 12.5% ​​and Short Term Capital Gains Tax from 15% to 20% in Budget 2024 could encourage retail investors to shift from traditional assets like securities to cryptocurrencies. While this shift is possible, it is important to note that crypto gains are taxed at a flat rate of 30% and unlike securities, losses on crypto cannot be set off against gains,” said Rajat Mittal, crypto tax advisor, Supreme Court.

On the positive side, the removal of angel tax for all classes of investors will go towards strengthening the startup ecosystem in India. Given India’s immense Web3 talent and potential, we look forward to more Web3 startups setting up base in India.

“CoinDCX welcomes the Finance Minister’s announcement in the budget today regarding the removal of Angel Tax for all classes of investors. We are confident that this will significantly strengthen the Indian tech startup ecosystem, especially in the Web3 sector,” said Sumit Gupta, Co-founder of Indian crypto exchange CoinDCX.

The story continues

The budget is Prime Minister Narendra Modi’s first since he was elected to a third consecutive term. Modi’s Bharatiya Janata Party (BJP) failed to win a majority in this year’s elections, forcing them to form a coalition government, though not without its limitations.

This budget is seen as a roadmap for his vision for the next five years, taking into account the emotions reflected by the unexpected election results.

Read More: India Unlikely to See Crypto Tax Cut in Tuesday’s Budget

UPDATE (July 22, 07:54 UTC): Added sentence to previous CoinDesk story. Added quote from industry policy body and details on changes to capital gains tax.

UPDATE (July 22, 08:13 UTC): Added details regarding angle tax and price quote received from Sumit Gupta.

UPDATE (July 22, 08:11 UTC): Additional comment added.