Diamond hand(cuffed)? India’s 2023 budget could cause trouble for crypto…
On 1 February, Nirmala Sitharaman, the Finance Minister of India, gave the Modi government’s last budget before the Lok Sabha elections in 2024. In the speech, the minister announced a surge of 76% in terms of digital transactions across the country.
Despite the growing number of digital transactions across India, the speech failed to bring up the topic of crypto. In terms of the technology sector, the government was more focused on advancements and developments in the AI (Artificial Intelligence) space.
However, after having a closer look at the budget, it was revealed that there were some changes made to the TDS (Tax Deducted at Source) rules that impact VDAs (Virtual Digital Assets).
The TDS of 1% would still be applied to all crypto transactions. Previously, there was no legal penalty for failing to pay the 1% TDS, even if a person intentionally tried to avoid paying or made an insufficient payment.
However, under the new law, a fine equal to the tax owed and/or a jail sentence ranging from 3 to 84 months can now be imposed for non-compliance.
Apart from this, the legislation around crypto, as of now, largely remains the same as last year. For the uninitiated, capital gains obtained from crypto assets will be taxed at 30%, regardless of under which tax slab the taxpayer comes.
It is also important to note that the tax slabs for Indian citizens have changed along with the tax deductions in those slabs.
While opting for the new regime, these changes could free up some income for Indian citizens in the form of savings, which could be used for making additional investments.
Moreover, a part of these additional investments may find their way into the crypto market.
Also to be noted here is that last year there were some talks about how the Indian government was contemplating a ban on cryptocurrencies. But, nothing of that information was officially confirmed. And, as per some experts, the budget for 2023 made it pretty clear that the ban is not on the cards, at least in the short term.