In a significant development indicating that the Indian government may not fully concur with the central bank’s overly hostile stance against cryptocurrencies, a junior minister explained that such activities are fine as long as they follow existing laws.
This is in stark contrast to the Reserve Bank of India’s (RBI) ban on crypto in 2018 and was not fully opened up to the sector, even as the Supreme Court threw out the RBI order in 2022, calling it illegal.
crypto is ok
“Today there is nothing that prohibits cryptocurrencies as long as it follows the legal process,” Rajeev Chandrasekhar, Minister of State for Information Technology and Electronics, said at an event on Thursday.
These comments take on significance as the Indian government will present the annual budget for the upcoming fiscal year on February 1.
Local crypto exchanges and investors who have faced an extremely hostile regulatory environment, from high taxes to denial of banking services, have called for and expect some relief to be announced in the budget proposals, which will go into effect, after deliberations. in parliament. , starting April 1.
“In particular, through our representation for the next Union Budget 2023-2024, we have suggested that the TDS rate be reduced to 0.01%. This lower rate will help Indian VDA companies offer competitive pricing to Indian VDA users and protect them from exposure to unregulated foreign exchanges,” Sumit Gupta, CoinDCX co-founder and CEO, said in a statement.
RBI Tough Stance
In recent months, RBI Governor Shaktikanta Das has described cryptocurrencies as having no underlying value and a poor cousin to gambling, potentially leading to dollarization of the economy and even triggering a global financial crisis. if efforts are made to regulate and allow them. function.
But a recent Nasscom study suggests that the Indian talent pool is driving the global momentum of Web3 and makes up at least 11% of the workforce. It also underscores the fact that more than 60% of Indian Web3 startups are registered outside of the country due to the unfavorable regulatory environment. The available data suggests that at least 7% of Indians have or have made crypto transactions.
Ecosystem pain points
Right now, the pain point in the Indian crypto ecosystem is the high tax regime that sets a 1% transaction tax and a 30% tax on profits made on cryptocurrency transactions. The government’s logic for introducing a 1% crypto transaction tax was to track all such transactions for tax purposes.
Crypto industry players like Sumit Gupta have argued that this purpose can be achieved by imposing a lower tax rate. As high taxes and strict regulations have prompted several startups to move from India to favorable jurisdictions like Singapore and Dubai, the government is expected to relax them to “foster innovation” in the blockchain space.
Indian tax authorities have collected approximately $7.4 million in taxes on crypto transactions from its implementation in July to mid-December. Low tax collection is another argument in favor of lowering the transaction tax, which is proving prohibitive.
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This post Indian Minister Says Crypto Transactions Are OK As Long As They Comply With Laws
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