The Union Budget is ever so important for any given country, as it showcases the broad policy positions of the government and serves as a platform for financial reforms. So to say, the core objective of the Union Budget is to bring about a steadfast and balanced economic growth of any given country which goes hand in hand with social justice and equality. Furthermore, the aim of the session would be to ensure efficient allocation of resources, decrease unemployment and poverty rate, reduce wealth and income disparities, keep an eye on prices and change tax structure for general well being.
As the Union Budget session is expected to start this July end, everyone is anticipating and expecting positive outcomes from the session. Having said that, here is what stalwarts of the Web3 Industry expects from the Union Budget 2024 session.
Dilip Chenoy, Chairman, Bharat Web3 Association:
Bharat Web3 Association Calls for Tax Reductions and Regulatory Clarity in Upcoming Union Budget. The Bharat Web3 Association (BWA) is pleased to see our finance minister Nirmala Sitharaman presenting the Union Budget for another year. As an industry body representing India's virtual digital asset (VDA) sector, we hope the government will consider our expectations for the upcoming budget. The Indian Finance Ministry invited the BWA to pre-budget consultations. We presented our demands and expectations, including a key request for a reduction in the transaction tax from its current 1% to 0.01%.
“We also requested the Finance Ministry to allow the setting off of losses on one VDA transaction against profits on other transactions. We advocated for the government to cosider income from the transfer of assets on par with other income sources. We believe that a lack of regulation has caused the Indian VDA industry and the government to lose significant revenue in recent years. A lack of clear regulations has forced Web3 startups and entrepreneurs to move to more VDA-friendly jurisdictions. India's Web3 startup ecosystem is held back due to the lack of regulation. The potential loss of technical expertise from the country in the blockchain and Web3 space is a concern we must recognize,” highlights Dilip.
“We urge the government to implement clear, industry-friendly regulations, and tax reforms that allow this emerging sector to flourish and create new opportunities and revenue streams. Finally, we reiterate our appreciation for the support and consideration Finance Minister Sitharaman has shown to the Indian industry thus far,” he adds.
Manhar Garegrat, Country Head India & Global Partnerships, Liminal Custody
Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget in July. For us at Liminal Custody, it is important that the upcoming budget addresses key issues in India's virtual digital asset (VDA) sector - primarily around taxation. As part of several other jurisdictions that we operate in as licensed and regulated custody service providers, we see regulators encouraging the growth of this nascent sector and we feel India’s economy can tremendously benefit by rationalizing taxation for digital assets. The biggest challenges for the digital asset market in India are 1.) the absence of long term & short term capital gains, 2.) an extremely high withholding tax that hampers tradeability and 3.) the inability of investors to offset their losses against gains.
"We feel the potential benefits of rationalizing these tax components to reasonable levels are significant and can promise a brighter future for India’s booming economy. This will help both the government as well as market participants ride the global wave of investments in digital assets. Many jurisdictions are making rapid progress in this area, and we hope the Indian government will also adopt a rational approach to resolve these issues," signifies Manhar.
“We hail some of the efforts made by the Government of India, especially around the FIU-registration of blockchain and VDA firms in order to offer a more secure platform for institutional investors. This has been a significant move and has provided the much needed legitimacy to the sector. We hope the honorable Finance Minister will continue with progressive developments for the sector by addressing the tax related issues in the upcoming Budget 2024-25."
Shivam Thakral, CEO of BuyUcoin, India’s Second-longest-running Digital Asset Exchange
BuyUcoin welcomes the upcoming budget presented by our Finance Minister, Nirmala Sitharaman. As a cryptocurrency exchange focused on the Indian market, we have high expectations from it. The Indian Virtual Digital Asset (VDA) market has seen a sharp decline in business over the past two years since the 1% TDS and 30% VDA gains tax were implemented in 2021. The 1% TDS has significantly impacted our business. We expect the upcoming budget to address our grievances and reduce the TDS and capital gains taxes on VDA transactions to reasonable levels, allowing us a level playing field to function and prosper.
The absence of specific regulations for the VDA market, coupled with the inclusion of VDA under anti-money laundering laws, has cast a negative shadow over the entire VDA market. We strongly advocate for the establishment of a comprehensive regulatory framework for the virtual digital asset market in India. This framework should be applicable to both Indian and offshore companies, and should ensure a level playing field for all, fostering fair and unhindered operation.
Due to a lack of regulations, VDA and Web3 businesses are moving offshore. Global venture funds are shy of entering the Indian market, depriving local businesses of funding opportunities. VDA investors are migrating to unregulated offshore exchanges with no protection of the law. “As a business, we are unwavering in our commitment to adhere to the laws of the land. However, we believe that there is a need for supportive laws that can facilitate our growth and prosperity, while also unlocking the full potential of the Indian market in this space. We urge the government to consider these factors when formulating the regulatory framework for the VDA market,” exclaims Shivam.
