A body representing the crypto and Web3 industry has urged the Union finance ministry to lower the tax deducted at source (TDS) on transfers of virtual digital assets (VDAs) from 1 per cent now to 0.01 per cent.
The Bharat Web3 Association (BWA), the industry body, has asked for a review of the flat 30 per cent tax rate applicable to income from the transfer of VDAs.
Dilip Chenoy, chairman, Bharat Web3 Association, said: “The stringent taxation framework and lack of regulation have led to a flight of capital, causing a significant revenue loss for Indian VDAs and the government in recent years. This has compelled Web3 startups and entrepreneurs to relocate to more VDA-friendly jurisdictions.”
The body has asked for an increase in the threshold for TDS deduction from Rs 10,000 to Rs 5 lakh.
The industry advocates income from the transfer of VDAs to be treated at par with existing sources of income.
The BWA has members such as Coindcx, Coinswitch, Wazirx, Zebpay, Mudrex, Suncrypto, Koinbx, Giottus, Transak, Cofinex, and Coinbase.
In the FY22 Budget, the Union finance minister introduced a 30 per cent tax on the transfer of any VDA, including cryptocurrencies. According to the policy, only the cost of acquisition can be deducted while computing income from such transfers.
Additionally, losses from these transactions cannot be carried forward.
“We urge the government to introduce clear, industry-friendly regulations and tax reforms that will enable this emerging sector to thrive and create opportunities and revenue streams,” Chenoy added.
The BWA has urged including foreign exchange within the scope of the TDS mandate.
On June 14, Business Standard reported the Financial Intelligence Unit-India (FIU-India), the national agency responsible for analysing suspicious financial transactions, had received requests from four more offshore crypto exchanges to operate in India again, according to a senior government official familiar with the matter. At the beginning of 2024, India had banned nine crypto exchanges — Binance, Kucoin, Huobi, Kraken, Gate.io, Bitstamp, MEXC Global, Bittrex, and Bitfenix — for not complying with anti-money laundering laws in the country.
Now there are 46 registered crypto entities. With Kucoin and Binance, their number will increase to 48.
First Published: Jul 11 2024 | 6:27 PM IST
