Bharat Web3 Association (BWA), a prominent Indian cryptocurrency trade body, has raised concerns about high taxes and regulatory uncertainty in a draft of concerns and recommendations submitted to the Indian Finance Ministry, which would be holding consultations for the budget of 2023-2024.
A meeting between BWA representatives and Indian finance ministry officials, particularly those from the Central Board of Direct Taxes (CBDT), is scheduled for next week.
The Finance Ministry of India introduced a 30% capital gains tax and 1% transaction tax deductions at source in its annual budget session for 2022-2023 on February 1. With a 30% tax on cryptocurrency, it is the government’s highest tax band for any asset. It also stated that profits from cryptocurrency transactions would not be carried forward and offset against losses.
Members of the Bharat Web3 Association, including CoinBase, CoinDCX, CoinSwitch Kuber, Polygon, and others, have noted that the country’s strict tax policies are hampering the growth of the crypto sector.
According to BWA, unfriendly tax policies are hurting the growth of the crypto industry in the country:
The BWA aims to highlight the impact of the existing tax provisions such as TDS, tax on income from VDAs, and not allowing carrying forward of losses on the wider industry and share its inputs on suitable amendments which can help address the concerns of the government and at the same time allow growth of this sector,
a BWA representative told Business Standard.
According to the association’s figures, these moves have had a significant negative impact on cryptocurrency trading, with Indian crypto exchanges experiencing a 90% drop in trading volume. While TDS can be claimed, traders do not find it convenient or beneficial to have their capital caged, and industry representatives have demanded that it be reduced from 1% to 0.1%.
In light of recent events such as the FTX collapse, the BWA has asked the finance ministry for stricter regulations. The association went on to say that the collapse of FTX was caused by a lack of corporate governance, which is also present in traditional finance. While cryptocurrency businesses must make significant efforts to deal with it, a strong regulatory environment can help improve the situation.