BENGALURU: The crypto industry, which has been expecting a reduction of TDS on virtual digital assets such as crypto in the budget, now hopes that the announcement will be made in full budget.
Rajagopal Menon, Vice President, WazirX, said, “We believe crypto and VDAs can be a force multiplier in achieving Viksit Bharat by empowering individuals at the grassroots level. Digital public infrastructure and the PM's aspiration for 'Anusandhan' will benefit from integrating provisions for long-term financing of domestic crypto projects, given how India is at a pivotal phase in the crypto revolution."
He added that he is expecting these developments to factor into the government's agenda along with the existing requests for a reduction in TDS rates to 0.01% and an offset of losses for traders.
Dilip Chenoy, chairman, Bharat Web3 Association, said, "Considering that this was a vote-on-account budget, we weren’t expecting any big movement during the session. We are eagerly anticipating changes to be announced post-elections when the full budget is announced, and we are optimistic with respect to the state of the sector in the country."
High TDS and income tax rates continue to be hurdles for the industry, as they have caused both creators and consumers to move out of India.
"This migration has significantly affected the prospects of Web3 in India. We have and will continue to highlight such concerns to key stakeholders," he added.
Sumit Gupta, co-founder of CoinDCX, said, "While the VDA industry had hoped for tax and TDS relief, we remain optimistic that the full budget will bring positive developments, including reduced taxation and a supportive policy framework. The VDA industry, rooted in digitization, innovation, and research, plays a pivotal role in facilitating decentralised storage, fractional ownership, metaverse development, interoperability, scalability, and sustainability."
"As such, it is believed that the crypto industry, a key component of the VDA ecosystem, holds substantial potential to contribute significantly towards realising India's developmental aspirations by 2047," he added.
Exchanges have been requesting that the offsetting of losses against gains be allowed. Since July 1, 2022, the 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 that three to five 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.