Union Budget 2023: Can We Expect A Rationalized Crypto Tax Policy?

Coingapestaff
January 26, 2023
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Union Budget 2023 and crypto tax

Indian Finance Minister Nirmala Sitharaman will present the Union Budget 2023 on February 1. FM will present the country’s income and expenditure plans along with new announcements for the crypto community of India. Notably, in the Union Budget 2022, the Finance Minister announced a crypto tax policy. The government introduced the policy under the newly introduced Section 115BBH of the Income Tax Act. With it, the government levied a 30% tax on cryptocurrencies in addition to a 1% TDS.

However, the crypto tax policy didn’t have a positive impact on the Indian crypto community. According to a study conducted by the Esya Centre and Taxsutra, domestic cryptocurrency startups shifted nearly INR 32,000 crore in transaction volume to overseas crypto exchanges between February and October 2022.

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Crypto Tax in India: What is the Crypto Community Saying?

Cryptocurrency firms have reportedly requested that the government implements rationalized taxation policies ahead of the Union Budget 2023. Punit Agarwal, Founder of KoinX, believes that a systematic regulatory framework will provide more clarity and some relief. In a public statement, he said,

“We indeed hope for the best in lieu of everyone’s interest as crypto is advancing for regulation to support transparent investigations.”

As stated earlier many investors have chosen to trade their assets on foreign exchanges without a system to deduct 1% TDS. They chose this path to protect their investments from the massive crypto tax imposed by the government. The high proportion of these transactions was unexpected by the authorities.

Also Read: Crypto Exchanges In India Lose Billions Since Tax Regulations: Report

Bharat Web3 Association (BWA) has written to the finance ministry. This newly formed cryptocurrency and web3 industry body expressed its concerns in the letter. It further recommended taxation and regulatory uncertainty in advance of the Union Budget 2023-24. Tarusha Mittal, chief operating officer (COO) and co-founder, UniFarm and Dapps, said,

“Bharat Web3 Association (BWA) has recommended that Sitharaman should highlight the impact of existing tax provisions such as TDS, tax on income from virtual digital assets (VDAs), and not allow carrying forward of losses on the wider industry.”

According to experts like Purushottam Anand excessive crypto tax after the Union Budget 2022 has significantly dampened customer interest. Crypto tax has further triggered a mass exodus of Indian crypto projects to other jurisdictions. Anand, the founder of Crypto Legal stated,

“The government introduced crypto taxation last year as a policy tool to maintain status quo and to discourage retail investors from entering crypto space till a regulatory framework is introduced.”

Also Read: Is Bitcoin (BTC) Price Gunning For $35,000 In Coming Months?

During the monsoon session of parliament in July 2022, FM stated that global collaboration can implement a common taxonomy standard on crypto. Now the Union Budget 2023 will show how much India has proceeded in accepting crypto.

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Why Trust CoinGape

CoinGape has covered the cryptocurrency industry since 2017, aiming to provide informative insights Read more…to our readers. Our journal analysts bring years of experience in market analysis and blockchain technology to ensure factual accuracy and balanced reporting. By following our Editorial Policy, our writers verify every source, fact-check each story, rely on reputable sources, and attribute quotes and media correctly. We also follow a rigorous Review Methodology when evaluating exchanges and tools. From emerging blockchain projects and coin launches to industry events and technical developments, we cover all facets of the digital asset space with unwavering commitment to timely, relevant information.

About Author
About Author
CoinGape comprises an experienced team of native content writers and editors working round the clock to cover news globally and present news as a fact rather than an opinion. CoinGape writers and reporters contributed to this article.
Investment disclaimer: The content reflects the author’s personal views and current market conditions. Please conduct your own research before investing in cryptocurrencies, as neither the author nor the publication is responsible for any financial losses.
Ad Disclosure: This site may feature sponsored content and affiliate links. All advertisements are clearly labeled, and ad partners have no influence over our editorial content.