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Express press service

BENGALURU: In the 2022 budget, the government announced a 30% tax and a 1% TDS (withholding tax) on all crypto transactions. For a year, crypto exchanges have been asking the government to clarify taxation and they hope that in this upcoming budget, which will be presented by Finance Minister Nirmala Sitharaman on February 1, the government will reduce the TDS and also address the uncertainty around L ‘industry.

Although the industry has been growing rapidly in India, certain events such as the failure of Luna and the collapse of exchanges like FTX and Celcius, have shaken user confidence. Additionally, RBI Governor Shaktikanta Das has maintained a strong stance against crypto. He also said it could be misused as a money laundering tool.

Rahul Pagidipati, CEO of ZebPay, said, “While it is great to see the government taking a step towards regulating VDAs, in the upcoming 2023 budget, we urge the government to create a phased regulatory framework and clarify the taxation by reducing TDS and Capital Gains Taxes and leveling them with other asset classes such as stocks and bonds.”

He added, “This will address the ongoing concerns and uncertainty about the industry by creating transparency and helping industry players protect users from any kind of black swan events like the collapse. from FTX. A clear governance and regulatory framework will allow more people to invest in VDAs. and achieve financial freedom.”

Many crypto exchanges have started publishing their proof of reserves in order to be transparent and also to gain investor confidence.

The industry is hoping for a further revision to the definition of VDAs in the upcoming finance bill separating crypto tokens from non-crypto tokens and separate tax regimes for each.

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In June 2022, the Ministry of Finance carried out carve-outs in the definition of VDAs, excluding (a) tokens whose transfer results in the transfer of ownership of the underlying tangible asset; (b) gift cards or vouchers; (c) mileage points, rewards points or loyalty card, being a record given without direct cash; and (d) subscription to websites or platforms or apps, said Ankit Wadhwa, co-founder and CEO of Rario.

The government should ensure accelerated implementation of the regulatory framework for crypto exchanges, increase the TDS exemption limit on VDAs, and provide crypto tax relief, said Vikram R Singh, Founder and CEO of Antier.

“Currently, cryptocurrencies and the recently launched RBI-launched CBDC seem to be opposite sides of the blockchain spectrum. However, there is huge scope for coexistence and interdependence. CBDC can be a great way to bridge the gap. divide between multiple cryptocurrencies, and the two can co-exist.As a central bank, the RBI has every reason to play it safe and do due diligence before technologies such as DeFi lending are adopted, but we look forward to positive announcements,” he added.

Moreover, 2023 will be a crucial year for crypto. “The crypto world is likely to remain volatile over the next few months until world-first countries like MiCA in Europe and the United States give a clear indication of the future of crypto. Finance will highlight directions from India’s perspective on the tax changes and new announcements are paramount to the industry as a whole,” said Dileep Seinberg, Founder, MuffinPay, Crypto Neobank.



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