Budget Expectations for Cryptocurrencies: India’s cryptocurrency market has seen exponential growth over the past few years. It is expected that the investment by Indians in cryptocurrency could touch $241 million by 2030. Currently, India has the highest number of crypto owners globally, at 10.07 crore, as per a recent study by Nasscom and WazirX.
“A bill was expected to be presented during the Winter Session of Parliament to regulate cryptocurrencies. However, it was not introduced, and it is now expected that the government may take up this bill in the Budget Session. If the government does not prohibit Indians from dealing in cryptocurrencies, we expect that it could introduce a regressive tax regime for cryptocurrencies,” says Naveen Wadhwa, DGM, Taxmann.
Considering the size of the market, the amount and the risk involved with cryptocurrencies, the following changes may be brought in the taxation of cryptocurrencies:
1) TDS/TCS provisions
Tax experts believe that both sale and purchase of cryptocurrencies above the threshold limit should be brought within the ambit of TDS/TCS provisions. This will help the government to get the footprints of investors.
2) Reporting in SFT
Both sale and purchase of cryptocurrencies should be brought within the ambit of reporting in the Statement of Financial Transactions. The trading companies already do similar reporting of sale and purchase of shares and units of mutual funds.
3) Higher tax rate
Similar to winnings from Lottery, Game Shows, Puzzle, etc., a higher tax rate of 30% should be levied on the income arising from the sale of cryptocurrency.
4) Loss can’t be set off
The losses from the sale of cryptocurrency should not be allowed to be adjusted from other income and should also not be allowed to be carried forward.