The crypto advocacy team has been working to secure concessions from unfavourable taxation as budget consultations are taking place.
A well-known cryptocurrency trade organisation has raised high taxes and regulatory uncertainty in India, Bharat Web3 Association (BWA), in a draft of concerns and recommendations it has sent to the Indian Finance Ministry, which is holding consultations ahead of the budget for 2023–24.
Next week, a meeting between BWA members and representatives of the Indian finance ministry is anticipated, particularly with those from the Central Board of Direct Taxes (CBDT).
Increased Taxes Affect Growth
According to media sources, BWA, which counts Coinbase, CoinDCX, CoinSwitch Kuber, and Polygon as many of its founding members, has claimed that unfriendly tax policies are hampering the expansion of the cryptocurrency industry in India.
A BWA representative told Business Standard that the organization’s goal is 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 government’s concerns while also allowing growth of this sector.”
In the budget for 2022–2023, the Finance Ministry introduced a 30% capital gains tax and a 1% transaction tax deduction at source (TDS).
It also stated clearly that earnings from cryptocurrency transactions would not be permitted to be carried forward and used to offset losses.
These restrictive actions severely impacted the cryptocurrency market, and Indian cryptocurrency exchanges saw a decline in trading volume of up to 90%.
Although TDS returns may be claimed, traders do not believe that having their capital frozen is profitable. Representatives of the cryptocurrency sector have pushed for a reduction of 0.1%.
Stronger Regulations Are Needed
In light of the FTX incident, the crypto advocacy group also requested that the Finance Ministry draft strict laws for the industry. According to BWA, the government is being consulted to ensure the establishment of a strong regulatory and compliance framework.
The group also stated that a lack of corporate governance, which is also present in traditional finance, is responsible for FTX’s collapse. Although dealing with it requires a lot of effort from cryptocurrency firms, the issue can be helped by a robust regulatory framework, it stated.