BENGALURU: The crypto industry, which has been seeking a reduction in the rate of TDS on the transfer of VDAs (virtual digital assets) from 1% to 0.01%, remained disappointed with the Budget as there was no mention of crypto or VDAs in Finance Minister Nirmala Sitharaman's speech.
Crypto exchanges had sought regulatory clarity, saying it was one of the most crucial steps towards a transparent investment ecosystem.
"In the cryptocurrency sector, there was an expectation that the government would align its taxation policy with other asset classes to foster growth and investment. Regrettably, this opportunity was not seized, marking a missed chance to further support startups and investors within the crypto space," said Vikas Singh, co-founder of NFTFN, a web3 fintech startup.
High tax of 30% on the gains was also one of the concerns that was not addressed in the Budget.
Dilip Chenoy, Chairperson, Bharat Web3 Association, said they will continue to push for rationalization of the taxation framework, which includes reducing the TDS to 0.01%, allowing setoff of losses on VDA transactions and modifying the 30% tax on capital gains.
The crypto industry also feels that Web3 as a sector was ignored in the budget as the request to reduce the TDS on VDA transactions was not accommodated in the Budget announcement. "The delay in reducing the TDS will hamper the industry growth prospects as digital assets will not have a level playing field with other asset classes like stocks, gold and real estate," said Shivam Thakral, CEO of BuyUcoin, the second-longest running digital asset exchange.
The tax on gains from VDAs still stands at 30% which is relatively very high and users are not allowed to offset losses like stocks. This move will prove to be detrimental for the web3 industry as it deprives the industry of a level playing field, he added.