India’s Union Budget of 2023 failed to recognize cryptocurrency and blockchain technology, dashing the expectations of Indian crypto holders across the country. After India implemented high taxes on cryptocurrencies in March 2022, many had hoped for a reduction in this year’s budget, but unfortunately, they were disappointed.
On February 1st, Indian Finance Minister Nirmala Sitharaman unveiled the union budget with significant alterations to the income tax brackets. During the address, the minister neglected to bring up cryptocurrency, central bank digital money, or blockchain technology. However, this is especially concerning considering that last year India put a 30% duty on all cryptocurrency earnings and enforced an extra 1% as Tax Deducted at Source (TDS) for every single crypto transaction.
By introducing a TDS system for all cryptocurrency transactions, the government hopes to gain insights into how many Indian citizens are using crypto coins. The data can be retrieved when Indians file their income taxes from May 2023, offering invaluable data to the authorities.
Following the introduction of a new stringent tax regulation, trading activities on India’s major crypto exchanges experienced an immediate 70% drop within ten days and almost 90% in the subsequent three months. This untenable burden forced aspiring digital currency projects to move abroad while many traders fled offshore to continue their investments.
Subhash Chandra Garg, former Finance Secretary at India’s Ministry of Finance, had observed that these taxes required clarity before implementation—something which is yet to come despite his role as chairperson for penning up the country’s initial cryptocurrency bill. He anticipates no further modifications in the upcoming budget for 2023.
Sathvik Vishwanath, the CEO of Indian exchange Unocoin, has revealed that new income tax laws for crypto were in effect only ten months ago. Additionally, TDS is just being implemented within the past seven months—this means that it will take a while before any substantial changes can occur regarding the cryptocurrency industry.
The government must gather enough information over 1-2 full financial years to assess and make alterations where needed; as such, no relevant news was expected on cryptocurrencies. We may hear some modifications eventually or during next year’s budget.Sathvik Vishwanath, CEO Unocoin
India is taking a global approach to crypto regulations, including crafting a common taxonomy. In July 2022, the finance minister requested G20 members’ assistance in forming an international standard for cryptocurrencies. Nonetheless, this could be why there was no mention of digital assets in the union budget as India continues its efforts toward creating a global agreement for cryptocurrencies.