In this year’s Budget speech, Finance Minister Nirmala Sitharaman did not mention cryptocurrency. Despite this, income from cryptocurrency continues to be taxed at 30% with tax deducted at source (TDS) remaining at 1%. As a result, many supporters of cryptocurrency in India took to Twitter to express their opinions.
Neeraj Khandelwal, co-founder of crypto exchange Coindcx, tweeted:“No changes to crypto taxation in India in the Budget Session. It stands at 1% TDS and 30% on profits. This puts India at a web3 disadvantage for another year.”
Despite the finance minister’s silence on cryptocurrency in her Budget speech, the Finance Bill reportedly includes an amendment to the Income Tax Act regarding TDS on crypto transactions. Experts state that failure to deduct or pay TDS on crypto transactions can result in a penalty equal to the unpaid TDS imposed by a joint commissioner. Additionally, there will be a 15% interest per annum imposed for late payments and failure to pay TDS could result in a jail term of up to seven years.
Last year, when the finance minister announced a 30% tax on cryptocurrency income and a 1% TDS on crypto transactions, the trading volume of cryptocurrency in India dropped significantly. The lack of a clear regulatory framework for cryptocurrency and the ongoing proposal by the central bank to ban cryptocurrency continue to contribute to the uncertainty in the crypto industry and discourage companies and investors from entering the market in India.
Sathvik Vishwanath, CEO of Indian cryptocurrency exchange Unocoin, wrote “There was no mention of crypto or blockchain in the Budget this time. It has been a year since the announcement of 1% TDS was done and we all thought it would affect the industry. It did! Now we need reviving amendments.”