Indian Budget 2024: Key Points & Crypto Future Uncertainty
Table of contents
- Indian Budget 2024 Key Highlights
- Cryptocurrency: Currently in a State of Uncertainty
- How Are Cryptocurrencies Taxed In India?
- The CEO of CoinDCX is actively supporting the ongoing trend to 'Reduce Crypto Tax.'
With the release of the Union Budget in February 2024, excitement was building around what it may hold for the Indian economy; however, this year's interim budget was limited in scope and focused primarily on maintaining current services without introducing significant new policies. As such, those invested in the rapidly growing cryptocurrency sector may not have too many expectations from this budget. Nevertheless, let's take a closer look at its key points to see if there are any notable developments or implications for the crypto space.
Indian Budget 2024 Key Highlights
The budget places a significant emphasis on infrastructure development, with an 11.1% increase in capital expenditure. The goal is to stimulate economic growth and generate employment, impacting sectors ranging from construction to logistics.
The government is unwavering in its commitment to fiscal consolidation, aiming to reduce the fiscal deficit to 4.5% by 2025-26. With this year's estimated deficit of 5.1%, it reflects a prudent approach amidst global economic uncertainties.
Ongoing initiatives, such as the 50-year interest-free loan for state capital expenditure and efforts to promote green energy and tourism, are anticipated to be continued.
Cryptocurrency: Currently in a State of Uncertainty
The current situation with cryptocurrency is a bit unclear. In the recent budget, people were hoping for clear rules about crypto, but none were announced. This has left businesses and investors unsure about what to expect.
What's likely to happen next?
There's a belief that a separate law about crypto will be introduced in the upcoming Parliament session. This law could explain how crypto will be treated in India, including rules and taxes.
Looking at the positive side, even though there are no direct rules for crypto, the budget talks about using blockchain technology in areas like farming and government. This could indirectly help the crypto world.
What should crypto businesses do now?
For now, businesses dealing with crypto should be careful. They should follow the current financial laws and best practices until clear rules for crypto are set.
How Are Cryptocurrencies Taxed In India?
In India, the taxation of cryptocurrencies changed with new regulations in the Union Budget 2022. Notably, a uniform 30% tax rate is applied to cryptocurrency earnings, and a one percent Tax is Deducted at Source (TDS) on sale transactions.
When it comes to taxing income from cryptocurrencies:
The 30% tax is levied on the profits or income generated through cryptocurrency transactions rather than the entire transaction amount.
This tax rate remains consistent for short-term and long-term gains, encompassing all investor earnings. Whether the income is classified as capital gains or business income, profits from activities such as trading, selling, or swapping cryptocurrencies are subject to a flat 30% tax and a four percent surcharge.
In addition to this tax, a one percent TDS is implemented on the sale of crypto assets exceeding Rs 50,000 (or Rs 10,000 in specific cases).
The CEO of CoinDCX is actively supporting the ongoing trend to 'Reduce Crypto Tax.'
CoinDCX CEO has brought attention to the ongoing 'Reduce Crypto Tax' movement, expressing concerns about the current 30% crypto tax rate and 1% TDS. In a recent post on X, Gupta used the hashtag to keep the momentum going and highlighted the potential impact on Web3 builders and consumers, suggesting a risk of migration beyond Indian borders. He has actively communicated these concerns to key stakeholders, advocating for a more favorable environment for the industry.
Gupta is optimistic that a supportive policy framework in the upcoming full budget could bring positive changes, encouraging Indian Web3 builders and investors to explore broader use cases beyond trading. He strongly believes that post the 2024 elections, India might see a reduction in the high crypto tax rates.
In line with PM Narendra Modi’s vision for 'Anusandhan' and long-term financing of domestic projects, Gupta envisions a digital landscape where innovation thrives. Despite challenges in India’s Web 3 space, he emphasized CoinDCX's commitment to building a future where India takes the lead in the global digital revolution.
The 2024 interim budget provides a foundation for sustained economic progress and infrastructural advancements, yet the cryptocurrency sector eagerly awaits further guidance. Although there are no radical changes, the budget sets the stage for a promising future.
The industry continues to push for clearer regulations and lower taxes. The CEO of CoinDCX, Sumit Gupta, is actively advocating for a reduced crypto tax rate and has expressed concerns about the potential impact of the current tax structure on Web3 builders and consumers. The Indian economy is poised for growth, and the role of cryptocurrency within it will become clearer in the coming months. For now, exercising caution and adhering to established guidelines is essential, awaiting regulatory clarity.