India's Crypto Tax Stance: Walking a Fiscal Tightrope in the Election Year
Feb 2, 2024
In India's recent annual budget announcement, Finance Minister Nirmala Sitharaman upheld the controversial Tax Deducted at Source (TDS) policy for cryptocurrency transactions, disappointing hopes for a reduction in taxes. The existing tax regime includes a 30% tax on crypto profits and a 1% TDS on all transactions, and despite calls for change from the domestic crypto industry and a study by a think tank advocating for lower TDS, the budget did not address these concerns. This decision has been a significant challenge for Indian crypto exchanges, forcing many to extend their operations to cope with the 1% TDS. The Bharat Web3 Association's Chairman, Dilip Chenoy, expressed cautious optimism, noting that while they didn't anticipate immediate changes in an interim budget, they look forward to potential adjustments after the upcoming elections. High TDS and income tax rates have driven creators and consumers away from India, impacting the growth of the Web3 sector. A study by the Esya Centre revealed that these taxes prompted around five million crypto traders to conduct transactions offshore, resulting in potential revenue losses of $420 million for the government since July 2022.