In the latest budget announcement, India’s Finance Minister Nirmala Sitharaman has kept the country’s crypto tax rules unchanged, despite strong requests from the crypto industry for reforms. The primary issue has been the high 1% Tax Deducted at Source (TDS) on crypto transactions, which industry representatives wanted reduced to 0.01%. Additionally, there were calls for a shift from the flat 30% tax rate on crypto gains to a more progressive tax system and the ability to offset crypto losses against gains. Unfortunately, these requests were not met in the new budget.
Instead, the budget introduces some other tax changes: long-term capital gains tax is increased from 10% to 12.5%, and short-term capital gains tax rises from 15% to 20%. These changes might influence retail investors to move their investments from traditional assets to cryptocurrencies. However, it’s worth noting that crypto gains are still taxed at a flat 30%, and losses from crypto investments cannot be used to offset gains.
On a positive note, the budget eliminates the angel tax for all types of investors, which is expected to boost the Indian tech startup ecosystem, especially in the Web3 sector. This could lead to an influx of new Web3 startups in India, leveraging the country’s strong talent pool in this field.
