As budget consultations are going on, the crypto advocacy group is lobbying to secure concessions from the unfriendly taxes.
A prominent Indian cryptocurrency trade body – Bharat Web3 Association (BWA) – has red-flagged the high taxes and regulatory uncertainty in its draft of concerns and recommendations submitted to the Indian Finance Ministry, which is holding consultations in the run-up to the budget for 2023-24.
A meeting between the BWA representatives and the Indian finance ministry officials, particularly with officials of the Central Board of Direct Taxes (CBDT), is expected to take place next week.
High Taxes Hurting Growth
As per media reports, BWA, which counts Coinbase, CoinDCX, CoinSwtich Kuber, and Polygon, among others, as founding members, has said unfriendly tax policies are hurting the growth of the crypto business in India.
“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.
The Finance Ministry introduced a 30% capital gains tax and 1% transaction tax deduction at source (TDS) in the budget for 2022-23. It also clarified that profits made on crypto transactions will not be allowed to be carried forward and offset against losses.
These harsh moves hurt the crypto trade badly, and Indian crypto exchanges witnessed a fall in trading volume in the range of 90%.
While TDS returns can be claimed, traders don’t find it profitable to have their capital locked. Crypto industry representatives have been demanding to bring this down to 0.1%.
Demand for Strict Regulations
The crypto advocacy body also asked the Finance Ministry to frame strong regulations for the sector in light of the FTX crisis. BWA is engaging with the government to ensure a strong regulatory and compliance framework is put in place, it said.
The association further added that the collapse of FTX is due to a lack of corporate governance which also exists in traditional finance. While cryptocurrency businesses have to make a lot of effort to deal with it, a strong regulatory environment can help improve the situation, it added.