India’s Cryptocurrency Tax Policy to Remain Unchanged for 2024/25

India’s Finance Minister Nirmala Sitharaman revealed the government’s stance on cryptocurrency taxation during the budget presentation for the 2024/25 fiscal year. This announcement follows an interim budget presented five months earlier.

In the interim budget of February, the government upheld the tax deducted at source (TDS) rate for cryptocurrency transactions at 1%, a regulation implemented in April 2022. This policy led to a significant decline in the Indian crypto market’s trading volume, causing widespread concern within the industry.

Industry Calls for Change

The Indian crypto industry has been vocal about the need for tax reforms. Representatives have proposed reducing the TDS rate from 1% to 0.01% and introducing progressive taxation on gains. They also emphasize the importance of allowing the offsetting of losses against gains to create a fairer tax system.

However, despite these appeals, the latest budget confirms that the 1% TDS rate will remain. Additionally, the flat income tax rate of 30% on earnings from crypto assets, as outlined in the interim budget, will continue to apply to both trading and investments.

The Finance Minister is adamant that the government’s cautious approach to regulating cryptocurrencies is reflected in the preservation of the current tax structure. The CEO of WazirX, the biggest exchange in India, Nischal Shetty, forecast in September 2023 that the government will probably maintain the current tax laws.

This move highlights the government’s intention to carefully control the cryptocurrency sector in spite of industry demands and the substantial effect on trade volumes. The Indian cryptocurrency community will have to operate around these unaltered tax laws while they keep pushing for a more lenient system.