The lack of adequate regulatory frameworks on crypto assets in India has always been a problem. Thus, India is still trying to cope with other developed countries by accepting cryptocurrencies as payment.
While, on the one hand, the Indian government still remains apprehensive of crypto assets, the regulatory frameworks also prevent citizens from exploring the crypto ecosystem. Hence, Bharat Web3 Association (BWA) puts forth new tax reformations.
Bharat Web3 Association, a well-known crypto advocacy group, suggested a set of recommendations to the Finance Ministry regarding the existing taxation on crypto assets.
The Association was launched after the dissolution of the Blockchain and Crypto Assets Council in July. Most Blockchain and Crypto Assets Council members, including CoinSwitch Kuber, Polygon, Coinbase, WazirX, and others, joined the Bharat Web3 Association after the former's dissolution.
The committee submitted a draft to the Ministry asking them to consider the taxation policy in the upcoming budget. The current taxation policy of India does not allow offsetting losses against profits. Evidently, the taxation policy in India did not favor crypto exchanges and transactions.
The Finance Ministry of India introduced a couple of new taxes on crypto transactions in the last financial year, 2022-2023. The Ministry imposed a capital gains tax of 30%, along with a tax deduction at a source of 1%.
The Ministry also declared that one could not carry forward the profits from crypto exchanges. Naturally, the nature of taxes created uncertainty amongst crypto users and threatened the nature and extent of crypto exchange.
According to the BWA, the crypto industry suffered from a sharp decline in trading volumes owing to these stringent laws in India.
One can expect the Finance Ministry to deliberate on the suggestions put forth by the Bharat Web3 Association. The Ministry had several meetings to discuss existing taxation policies on crypto exchanges.
Thus, one may expect tax reformations in the next fiscal year. The crypto industry representatives currently demanded a slash of the TDS policy to 0.01%. Evidently, India is expected to undergo several changes in the crypto ecosystem.
The change in existing taxation policies would also significantly improve the nature and volume of crypto transactions, improving India's position in the crypto ecosystem.