India's cryptocurrency sector seeks significant tax reductions to rejuvenate the market
India's Cryptocurrency Industry Lobbies for a More Favorable Tax Regime
The cryptocurrency sector in India is actively advocating for a friendlier tax regime to encourage growth, currently plagued by a restrictive framework. According to a report by the Financial Times (FT), the industry has turned its attention to reducing the 30% capital gains tax and the 1% transaction tax (TDS) imposed in 2022. These tax laws have triggered a mass exodus of crypto trading to offshore platforms, costing the domestic market dearly.
Industry leaders, such as Ashish Singhal, co-founder of CoinSwitch, are arguing for a reduction in the TDS to 0.1%, citing the need to preserve domestic trading while enhancing transparency. Regular discussions between crypto stakeholders and policymakers are a more frequent occurrence than before, which signifies a growing rapport between the two parties. The progressive attitudes of the U.S. administration, notably under President Donald Trump, are seen as a precedent for India's demands for a change in the regulatory environment.
In an interview with the FT, Singhal expressed confidence in the ongoing dialogue with regulators and suggested that a moderate transaction tax rate could discourage the migration of legitimate trading to overseas operators.
While the Reserve Bank of India remains a staunch critic of the crypto sector, citing potential negative impacts on financial stability, the government is increasingly considering the use of blockchain technology for financial inclusion and economic transparency.
Further developments in the crypto sector's push for tax relief are eagerly anticipated, with no formal changes appearing in the February 2025 budget. However, the government has indicated ongoing discussions about regulatory changes, particularly in the drafting of a key crypto policy discussion paper.
Sources:
- Grant Thornton
- Financial Times
- The Economic Times
- NDTV Profit
- LiveMint
A more inclusive financial system and economic transparency through blockchain technology are among the potential benefits the Indian government is exploring, which may bode well for the ongoing debate about a more supportive tax regime for the cryptocurrency sector.
- The cryptocurrency market in India is seeking a more favorable tax regime to foster growth, focusing on reducing the current 30% capital gains tax and 1% transaction tax (TDS).
- Industry leaders, such as Ashish Singhal of CoinSwitch, are urging for a decrease in the TDS to 0.1%, aiming to preserve domestic trading and enhance transparency.
- Regulatory discussions between crypto stakeholders and policymakers have become more frequent, signifying a growing understanding between the two parties.
- While the Reserve Bank of India maintains opposition towards the crypto sector, the government is exploring the use of blockchain technology for financial inclusion and economic transparency.
- The ongoing dialogue regarding a more supportive tax regime for the cryptocurrency sector is crucial, with anticipation building for any formal changes in the February 2025 budget, including potential regulatory changes, as evidenced by the drafting of a key crypto policy discussion paper.
