Nirmala Sitharaman, the finance minister of India, skipped to address the topic of cryptocurrencies all together as she read out the Union Budget for the fiscal year of 2023-2024 on Wednesday, February 1. Indians had been pinning hopes for more clarity around crypto activities from this year’s Union Budget announcement. Industry insiders, however, did anticipate that the government could remain tight-lipped about this next-gen fintech sector in the backdrop of an array of reasons.
India levied a 30 percent tax on all profits generated out of crypto trading and other related activities last year. In addition, one percent TDS has also been levied on each crypto transactions so that the government could manage to maintain a trail on these largely anonymous payments.
It has been less than a year since these tax laws came into effect for the crypto sector in India, which is why no amendments to the existing regime or new rules around the sector were announced today. This opinion was shared with Gadgets 360 by Sathvik Vishwanath, the Co-Founder and CEO of crypto exchange Unocoin.
“Government needs to have enough data for an extended period, say a year or two full financial years, to analyse and make amendments as necessary. Hence, no significant news was expected on crypto industry anyway,” Vishwakarma said.
The Unocoin honcho also revealed that his company has been sharing interim data with the Indian government about the nature and number of transactions now that the tax systems have been put in place.
In the last one year, Indian crypto traders as well as industry players have urged the finance ministry to consider lowering the imposed taxes.
In December last year, India’s industry body Bharat Web3 had called the crypto tax ‘unfriendly’ that was hindering the growth of the sector.
Despite constant repetition, this outcry from the crypto space did not rattle the finance ministry’s sceptical approach towards the sector.
Today, FM Sitharaman’s tight-lipped stance around the crypto industry did leave players rather disappointed.
In conversation with Gadgets 360, Rajagopal Menon, Vice President at the WazirX crypto exchange, said that the government must revisit the tax laws and grant some relief to the industry soon.
“There is lingering uncertainty because of high taxes and a lack of a solid regulatory framework which are stifling progress in the industry. For now, trade volumes on Indian exchanges may remain flat at rock bottom. We hope that the government will reconsider its position on crypto taxes and work with the industry to create a regulatory framework that supports and encourages growth,” Menon noted.
On social media, it appears many have heaved a sigh of relief because FM Sitharaman did not say anything negative or alarming against the crypto industry.
After RBI’s firm resentment towards allowing the spread of the crypto culture, FM Sitharaman’s avoidance on the subject seems to have given a rise to the ‘no news is good news’ sentiment among crypto enthusiasts.
True. Anyways “ban” is now out of the equation as they seek a global regulatory framework for crypto through G20. By this time next year, I believe we can see some progress there.
— Mohith | Fact Protocol (@MohithAgadi) February 1, 2023
Meanwhile, there were a bunch of announcements that in the long run could help the crypto industry flourish once India finalises its regulatory framework.
FM Sitharaman, for instance, said India is going bullish on a tech-driven economy.
The country is also accelerating efforts to adopt and promote the production as well as usage of clean energy, which could elevate the position of India in the power-intensive crypto mining business.
Experts from the crypto industry have acknowledged the focus that India is laying on the overall digital transformation of the national finance sector.
“The thrust to improve financial literacy and to build DigiLocker as a one-stop KYC solution are positives for the wealth tech ecosystem. Its use has greatly helped us at CoinSwitch to implement more user-friendly KYC standards,” Ashish Singhal, CEO and Co-Founder of CoinSwitch, told Gadgets 360.
Sitharaman also did not mention any development around the launch of India’s Digital Rupee CBDC that is currently under trial runs in metro cities under RBI’s supervision.