2024 Budget Expectations in the Crypto Sector: Anticipating Tech Innovation and Tax Regularisation

Less than a week remains before the presentation of the interim budget by Union Finance Minister Nirmala Sitharaman, and people from India’s cryptocurrency sector are eagerly hoping for the adoption of a well-defined legal framework and a streamlined tax structure to address taxation complexities.

There is anticipation for a more nuanced approach to outlining a definition of Virtual Digital Assets (VDAs) in the digital asset industry. Additionally, the implementation of policies to promote innovation and research and development is seen as crucial for a stronger crypto industry in the country.

Manhar Garegrat, Country Head of India & Global Partnerships at Liminal Custody Solutions, stressed the importance of investment and innovation in segments such as the tokenization of real-world assets. He believes that with progressive policies, India has the potential to become a global leader in the digital asset space. Garegrat called for the government to amend the VDA definition to explicitly exclude tokenized assets with proven underlying value, similar to established precedents like gift card exemptions.

Tapan Sangal, Founder of Mai Labs, expressed his belief that 2024 is the year of “transitioning from foundational learning to imperative application of lessons” for the blockchain industry, especially with the wider adoption of AI and other advanced technology.

Calling for a reconsideration of the taxation system, Sangal emphasized the need for a regulatory environment that optimally harnesses technological innovation to prevent inequality and manipulation in the crypto landscape.

Manhar Garegrat advocated for the removal of the 1% Tax Deducted at Source (TDS), noting that this incentive will attract investment, generate high-skilled jobs, and solidify India’s position as a global leader in secure digital asset custody.

The industry also seeks the government’s focus on tax regularization, Web3 startups, and the creation of special economic zones to foster innovation and development in the country. Nischal Shetty, CoFounder of Shardeum, emphasized the potential of Web3 and blockchain to solve many of India’s challenges in sectors such as payments, education, and healthcare.

With the industry eagerly awaiting the Union Budget, specific domestic regulations, dedicated funds for indigenous blockchain products, and tax incentives are seen as essential for the stability and growth of the Web3 ecosystem in India.

Shivam Thakral, CEO of BuyUcoin, called for tax incentives and sandboxes to nurture startups in the crypto industry, noting that this would create a new generation of jobs, propel India into the global DeFi and blockchain space, and unlock economic growth.

In conclusion, the cryptocurrency sector eagerly awaits the introduction of a tax framework and a nuanced legal regulation in the interim budget and full-fledged budget post-election to unlock its true potential.