 "Budget 2023-24 Expectation: Why accepting, adopting crypto will encourage India’s financial inclusion")
Over the last decade, cryptocurrencies have dominated the news in India. In 2017, the Reserve Bank of India (RBI) took a tough stance, restricting banks from delivering services to anyone associated with digital currencies. However, the RBI’s action was overturned by the Supreme Court of India in 2020. While the RBI remains wary of digital currencies, it has reopened the debate by announcing its own Digital Rupee.
India’s crypto market has now grown exponentially, and it is now one of the leading countries in terms of crypto investment, with more than $5.3 billion in the market. Cryptocurrencies assist in economic growth as exemplified by multiple nations across the globe by mandating rules and regulations to boost their economy. Unfortunately, in India, there are still numerous apprehensions about the taxation of cryptocurrency, its categorization, applicable tax rates, TDS/TCS and GST implications on the acquisition and sale of cryptocurrencies, and other concerns, which crypto owners are hoping will finally be addressed during Honorable Finance Minister Nirmala Sitharaman’s budget session in 2023.
Taxation on Virtual Digital Assets
Crypto market participants must pay a 30 percent tax on their cryptocurrency gains in the fiscal year 2022-23, with no exclusions or concessions. Several crypto exchange platforms and tax firms anticipate that the government should reconsider the current proposed crypto tax structure and bring it in line with other normal business activities.
Standardized taxation on Virtual Digital Assets is a good place to start because it will reassure crypto investors that the government has taken note of this asset class. The government’s latest revelation about launching a crypto outreach program, in conjunction with a progressive taxation policy, would go a long way toward placing India at the frontline of the digital and economic tech sector.
Prevent rise of a parallel economy of black money
Following the unveiling of e-rupee, India’s own central bank digital currency, the central government is likely to stiffen regulations for cryptocurrencies. The nature of crypto, as well as its initial absence of regulation, culminating in a huge influx of illegal transactions, specifically money laundering. It is therefore critical for a country like India for the bill to be approved by the government and define the Crypto gains because it will help prevent the rise of a parallel economy of black money by bringing cryptocurrency under the supervision and regulation of the RBI.
Impact Shorts
More ShortsRegulatory framework for digital wallet companies
Crypto investors are awaiting that the forthcoming Budget will establish a regulatory framework for crypto wallet brands as well as a single point of contact for registration and operation in India under the watchful eye of relevant regulatory bodies. Storing digital assets in a safe and compliant manner has become an essential requirement, India, therefore, must support professional digital wallet infrastructure businesses that are regulated, compliant, and licensed in order to strengthen the trust of retail and institutional stakeholders as well as contribute to India’s goal of becoming a $5 trillion digital economy.
Promotion of Blockchain, Metaverse, NFTs and DeFi
The Budget 2023 must take concrete actions to propel India toward the next stage of the Web3 economy by endorsing internet-enabled revolutionary technologies such as blockchain, metaverse, NFTs, and DeFi. Structural reforms that are appropriate will not only improve the conviction of the industry, including users, exchanges, and web3 initiatives but will also likely deliver long-term perks that push India’s digital economy narrative.
Recognize crypto as an asset class
The government has held cryptocurrency earnings in line with income from other exercises such as gambling. Crypto players’ demand for a long time has been to classify it on equal ground with other investment tools such as securities and bonds. Not only will the tax levels be the same, but the confusion surrounding estimations, disclosures, and treatment will be nullified. Making Crypto an asset will make the matter more understandable, transparent, and simple.
The writer is Founder & CEO of Cashaa- a Crypto neo banking startup. He tweets @kg_Cashaa @yourCashaa. Views expressed are personal.
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