India Resists Lowering Cryptocurrency Taxes Despite Industry Pushback
2 min read![India Resists Lowering Cryptocurrency Taxes Despite Industry Pushback 1 India Maintains High Crypto Tax Rate Despite Industry Pressure](https://cryptoinfonet.com/wp-content/uploads/2024/07/India-Resists-Lowering-Cryptocurrency-Taxes-Despite-Industry-Pushback-1024x614.jpg)
India has confirmed its decision to maintain its current crypto tax regulations for the 2024/25 fiscal year, despite industry leaders’ ongoing appeals for a reduction in rates. Finance Minister Nirmala Sitharaman announced this during the budget presentation for the 2024/25 fiscal year.
The latest Indian budget presentation follows the interim budget from five months ago, which kept the 1% tax deducted at source (TDS) rate for crypto transactions that was established in April 2022. This rule led to a decrease in trade volumes in the Indian crypto industry, prompting industry advocates to push for a reduction in the TDS rate to 0.01%, progressive taxation on gains, and the ability to offset losses against gains.
The recent budget presentation confirmed no changes to the 1% TDS rate or the 30% flat income tax on crypto earnings. Additionally, the long-term capital gains tax increased from 10% to 12.5%, and the short-term capital gains tax rose from 15% to 20%. While the impact of these changes on crypto trading is uncertain, the removal of the angel tax for all investors is seen as a positive development that could attract more Web3 startups and grow India’s startup ecosystem.
Despite expectations, Sitharaman upheld the current crypto tax rates due to the government’s concerns about the risks associated with crypto trading. The Reserve Bank of India (RBI) has historically opposed cryptocurrencies, banning financial institutions from servicing the industry in 2018, a decision overturned by the Supreme Court in 2020. The RBI reiterated the speculative nature of crypto assets in its May 2024 bulletin and criticized decentralized finance (DeFi) for being driven by speculation rather than genuine economic transactions.
Despite the strict tax policies, the Indian crypto industry remains hopeful for future tax reductions, especially based on international developments promoting or legalizing crypto. India continues to lead globally in crypto adoption, as shown by Chainalysis’ 2023 Global Crypto Adoption Index. The local industry continues to advocate for tax reforms in hopes of a more favorable regulatory environment.
However, recent events such as election results and the $234.9 million hack of the crypto exchange WazirX may have shifted cryptocurrency regulation lower on the government’s priority list.
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