Crypto Industry Hopes for Tax cut in Budget from Finance Minister Nirmala Sitharaman

This year’s budget is to be presented soon. The business of cryptocurrencies has grown rapidly in the country in the last few years. However, the crypto industry complains of high tax burden. Crypto-related firms hope that Finance Minister Nirmala Sitharaman can give some tax relief to this segment in the upcoming budget.

The government had imposed a TDS of one percent on crypto-related transactions in the 2022 budget. Apart from this, there is also a restriction on offsetting losses in this segment. Firms related to crypto say that balancing the tax for this segment can boost their business. These firms have made demands like reducing TDS on crypto transactions to 0.01 percent, allowing offsetting of losses and reducing the tax rate on Virtual Digital Assets (VDA).

Crypto investors turn to foreign exchanges because of the one percent TDS on transactions. This makes it difficult for the government to monitor these transactions. Before Donald Trump becomes President of America early next week, there is a strong rise in Bitcoin, the most popular cryptocurrency of this market. The price of Bitcoin is trading at more than one lakh dollars.

However, the central government has taken a strict stance regarding cryptocurrencies. Recently, Home Minister Amit Shah had said that cryptocurrency, dark web, online marketplaces and drones are a challenge in the efforts to stop drug smuggling in the country. He said that strict measures are needed to control this. Reserve Bank of India (RBI) had also expressed the need to ban this segment. RBI had described cryptocurrencies as a major risk to financial and monetary stability. Last year, former RBI Governor Shantikanta Das had said, “I believe that it should not be allowed to dominate the financial system. This poses a big risk to financial stability. Cryptocurrencies also pose a risk to the banking system. “This may create a situation in which the Central Bank may lose control over the supply of funds in the economy.”