Indian crypto platforms push for tax rethink ahead of February budget

As India prepares for its upcoming budget announcement in February, leaders within the cryptocurrency sector are advocating for a reassessment of the current tax structure affecting digital assets. Industry representatives argue that the existing taxation framework, which imposes transaction-level taxes and restricts the ability to offset losses, is significantly hindering market liquidity and growth.

Since the Indian government implemented stringent compliance measures and enforcement protocols for cryptocurrencies, market participants have voiced concerns about the adverse effects of high tax rates on trading activities. The current tax regime, which includes a 30% tax on profits from crypto transactions and a 1% TDS (tax deducted at source) on all transactions, is seen as a barrier to entry for both retail and institutional investors. Many believe that these policies are discouraging participation in the crypto market, thereby stifling innovation and investment.

Industry leaders have noted that the inability to carry forward losses or offset them against gains is particularly detrimental. This lack of flexibility not only discourages traders but also affects the overall health of the crypto ecosystem in India. As a result, there is a growing call for the government to reconsider these tax policies to foster a more favorable environment for digital asset trading.

Furthermore, the Indian crypto industry is urging policymakers to create a more balanced regulatory framework that encourages growth while still ensuring compliance with financial regulations. Advocates suggest that a revision of the tax structure could lead to increased participation in the crypto market, ultimately benefiting the broader economy.

The upcoming budget presents an opportunity for the Indian government to engage with industry stakeholders and explore ways to create a more conducive environment for the burgeoning cryptocurrency sector. As discussions continue, it remains to be seen how policymakers will respond to these calls for change.

Key Takeaways

• Industry leaders in India are calling for a review of the current tax policies affecting cryptocurrency trading.
• High transaction-level taxes and restrictions on loss offsets are believed to be limiting market liquidity.
• A more favorable tax structure could enhance participation in the crypto market and support economic growth.
• The upcoming February budget is seen as a critical opportunity for dialogue between the government and the crypto industry.

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This article was inspired by reporting from CoinTelegraph. · Report an issue