Cryptocurrency: What to expect for the digital currency from Budget 2023 – Forbes India

Life is not a template and neither is mine. Like several who have worked as journalists, I am a generalist in my over two decade experience across print, global news wires and dotcom firms. But there has been one underlying theme in each phase; life gave me the chance to observe and tell a story — from early days tracking a securities scam to terror attacks and some of India’s most significant court trials. Besides writing, I have jumped fences to become an entrepreneur, as an investment advisor — and also taught the finer aspects of business journalism to young minds. At Forbes India, I also keep an eye on some of its proprietary specials like the Rich list, GenNext and Celebrity lists. An alumnus of Xavier Institute of Communications and H.R College of Commerce and Economics in Mumbai, I have worked for organisations such as Agence France-Presse, Business Standard, The Financial Express and The Times of India prior to this.
Cryptocurrency: What to expect for the digital currency from Budget 2023Much of the Indian government’s policymakers’ move to impose high taxes and clamp down on digital virtual asset trade has caused losses for the ecosystem. Illustration: Chaitanya Dinesh Surpur
In the new year, retail investors and intermediaries operating in the cryptocurrency ecosystem must be wondering how much longer the trade needs hospital care to survive and recover to a state of well-being.

2022 was a year to forget for crypto: Bitcoin and ethereum prices fell near 60 percent in the year in a risk-averse environment; stablecoins TerraUSD and Luna collapsed; trading volumes at some of India’s leading crypto currency exchanges plunged by nearly 90 percent due to high taxes; and by the year-end the FTX exchange had filed for bankruptcy after a bank-type run and its founder Samuel Bankman-Fried faces conviction.

Much of the Indian government’s policymakers’ move to impose high taxes and clamp down on digital virtual asset trade has caused losses for the ecosystem. Technology policy think tank Esya Centre carried out an estimate of the impact of India’s tax policy on centralised virtual digital asset (VDA) exchanges. It revealed that there was a shift of a cumulative trade volume of around $3,852 million (about ₹32,000 crore) from domestic crypto exchanges to foreign ones during February to October 2022, following the announcement of a new tax regime in India.

Esya Centre, in its January 2023 report, has suggested that the government lower the current TDS rate on crypto transactions, like the securities transaction tax, given that the TDS mandate is also meant to enhance transaction tracking. “This will help curb the distortionary effect of TDS on the industry,” says Vikash Gautam, adjunct fellow at Esya Centre.

Also read: Cryptos: Against the wall but still battling

In October last year, the OECD presented a new crypto asset reporting framework to G20 finance ministers and central bank governors. India’s Minister of Finance Nirmala Sitharaman has said regulation of crypto assets is a “priority” for the G20 Presidency, which started in December 2022.

The hope is that crypto, as an asset class, will start to get parity with other assets such as stocks, gold and bonds.

Ashish Singhal, co-founder and CEO of CoinSwitch, says: “While last year’s Union Budget was about recognising cryptos, this year should be around refinement. It is essential to implement progressive taxation policies. The absence of comprehensive regulations, which are at the intersection of user protection, supports legitimate Indian startups, and serves the requirements of the regulators, makes the mechanism counter-productive.”

Also read: Cryptocurrency Tax: Your Definitive Guide To New Rules

Crypto trade currently faces a 30 percent flat tax, 1 percent TDS and no provision to offset losses. The government also charges 18 percent GST on crypto exchanges that deal with buying and selling of cryptocurrency.

Singhal says India should incentivise users to stay within national jurisdiction by reducing the burden of taxes.

Also read: They built crypto unicorns out of India. Now they need to diversify

If the TDS aims to establish a trail of crypto transactions, it can be achieved by a lower TDS rate of 0.1 percent. Similar to listed securities, existing provisions of capital assets should be made applicable for VDAs. Third, to make India a competitive country in the growing crypto industry, tax authorities should allow carrying forward and setting off losses incurred from the sale of VDAs, similar to how it is done for capital gains.

These steps are likely to increase customer adoption and generate healthy revenue pipelines for the government. But going by the inclination of the government, it is probably too early for a review of existing tax regulations against the crypto trade and we may not see a major relief for investors at the moment. 

Check out our Festive offers upto Rs.1000/- off website prices on subscriptions + Gift card worth Rs 500/- from Click here to know more.
(This story appears in the 27 January, 2023 issue of Forbes India. To visit our Archives, click here.)
For hassle free instant subscription, just give your number and email id and our customer care agent will get in touch with you
click here to Subscribe Online
Simply Speaking: Aping trends is wannabe. It is not what great brands do
Universal Digital Payment Network launched by Hong Kong-based blockchain company
Wavemaker India's Vishal Jacob: Our product is our people and transforming them becomes critical
Mars Hub, the original Terra lending protocol, to launch mainnet
Uorfi Javed: Consistency is the key to stay in fashion, in conversations and in business
Chinese gamers bid sad farewell to 'World of Warcraft'
A career in the family business: Duty or choice?
Photo of the day: A new approach
China greets the Year of the Rabbit with pro-growth policies
Girish Mathrubootham on how to stay hungry amid a carnage
Cryptocurrency: What to expect for the digital currency from Budget 2023
Out of Nile, into tile: Young Egyptians battle plastic plague
City of Busan to launch decentralised digital commodities exchange
Report on blockchain released by New Hampshire governor
Global brands make localization their mantra to tap into $2.6bn Indian gaming market


Image - ThumbHow To Make Huge Profits In A Short Time With Crypto
Get detailed training system that shows an absolute beginner (without any skill) how to make huge profits in a short time with crypto.
Image - ThumbCrypto + NFT Quick Start Course
The #1 course for profit in the Crypto & NFT world - You will discover the secrets that 99% of people don’t know yet

About the Author: admin

You might like

Leave a Reply

Your email address will not be published. Required fields are marked *