BENGALURU: The crypto industry expects the finance ministry to reduce the tax deducted at source (TDS) rate on virtual digital assets (VDAs) from 1% to 0.01% in the upcoming Budget. The industry also urges the government to allow offsetting and carrying forward losses from sale of VDAs. From July 1, 2022, transfer of VDAs such as cryptos has been attracting 1% TDS under section 194S of the Income tax Act.
A report recently published by technology policy think tank, the Esya Centre, said 3-5 million crypto users have shifted to offshore trading platforms with the imposition of a 1% TDS on the trading VDAs, and that this has deprived the exchequer of Rs 3,493 crore revenues, as against the collected revenue of Rs 258 crore.
Exchanges such as WazirX said the offsetting of losses against gains made should be allowed. “The underlying objective is to ensure a level playing field in the crypto space, devoid of regulatory or tax arbitrage for any participant,” said Rajagopal Menon, vice- President, WazirX.
Since the beginning of 2023, the global market capitalisation of crypto tokens has shown positive growth. Rahul Pagidipati, CEO, ZebPay, is hopeful for a budget that recognises the dynamic nature of the industry and provides the necessary impetus for its continued positive trajectory in the coming year.
Edul Patel, CEO of Mudrex, also stressed that the current imposition of a 1% TDS on every transaction could potentially hinder crypto adoption. Addressing this concern in the upcoming budget would be a prudent step, aligning with the government’s broader objectives in supporting a robust and sustainable crypto ecosystem, he added.