The Union Budget 2025 is merely a few hours away and the Indian crypto industry, like the past couple of years, is seeking the simplification of taxations on the virtual digital assets (VDAs). The industry players believe that the eased down taxations on the digital asset class shall boost the Indian startup ecosystem and economy.
India has consistently ranked among the top nations in crypto adoption, showing the growing interest of Indians in the digital asset space. However, the steep tax norms clamp the activity down. While the Union Budget 2022 provided some clarity to the ecosystem, it also brought challenges, triggered by the higher taxations. Industry players believe that the FM should revise the crypto tax norms for the larger good.
The expectations of the crypto community remain consistent with that of the previous two years, said WazirX. "Modifying TDS rate to 0.01 per cent will serve the purpose of the provisions without affecting the traders negatively. The second demand is the reduction of tax rate on crypto, where traders are paying a 30 per cent tax on their gains from virtual assets gains with no exemptions or concessions," it said.
Echoing the similar demands, Sumit Gupta, co-founder, CoinDCX said that the Indian virtual digital assets (VDA) industry has immense potential to drive economic growth, but the current taxation framework is unintentionally pushing users and trading volumes to offshore platforms.
He also seeks comprehensive regulations, including a licensing framework, to protect consumers and foster innovation in the upcoming budget. "India should look to strike a balance between regulation and growth. The upcoming budget is a critical opportunity to address these challenges and strengthen the domestic crypto ecosystem," Gupta said.
Finance Minister Nirmala Sitharaman shall be tabling her eighth union budget on Saturday, February 1. In her budget speech of the 2022 Union Budget, she announced to tax the gains on virtual assets at a flat 30 per cent rate, with no preposition to offset the losses in any other asset, even from the digital space.
The FM also imposed 1 per cent TDS on the digital assets from July 2022. The move was welcomed initially, marking the formal acknowledgment to the digital assets. However, it later proved to be a damning blow to the industry, drying up the volumes from a number of platforms.
Besides that eased down taxation norms, Edul Patel, CEO & Co-founder of Mudrex believes that the inability to offset losses against gains has further discouraged investor participation. He expects FM to be done away with these norms. "We look forward to a more balanced and progressive approach that would encourage innovation and support sustainable growth for the sector, " said Patel.
For the knowledge, the global crypto market capitalization has topped the $3.5 trillion mark, with daily trading volumes now crossing the $100-200 billion mark on a regular basis, the data from Coinmarketcap suggest. Bitcoin, the world's largest and oldest crypto asset topped $1 lakh mark in December 2024, and currently sits at the market valuation of $2.6 trillion within the crypto market.
It is pivotal for India to align its crypto policies with the global regulatory framework to fully harness the industry’s potential, said Raj Karkara, COO at ZebPay.
We are hoping that the Union Budget 2025 shall recognize crypto as a formal asset class, with clear classifications is another critical step," Karkara added. "We look forward to policies that incentivise innovation, such as subsidies or tax breaks for blockchain and Web3 startups to pave the way for an inclusive, secure, and innovation-driven digital economy in India.”
"We also anticipate measures that will clarify taxation on VDA, encourage responsible investing, and support the mainstreaming of digital currencies," said Vishal Sacheendran, Head of Regional Markets, Binance. "These steps will not only promote broader adoption but will also strengthen India’s position as a key player in the global VDA and blockchain landscape."