The sector is hoping that the government will allow crypto investors to offset and carry forward their losses to level the playing field for virtual digital assets (VDAs) in India.
After the introduction of a 30 per cent crypto tax in the last budget, crypto trading volumes in India plummeted by up to 90 per cent. The sector has stated a host of demands from the union budget in this circumstance.
The cryptocurrency industry is hopeful that FM Sitharaman will propose a proper regulatory framework for domestic cryptocurrency exchanges.
Right now, the crypto tax front is unmistakably hard for new investors and dealers entering this ecosystem. There’s plenty to worry about, from unclear tax oddities to increased TDS on crypto transactions. As a result, crypto fans have linked specific expectations to the Union Budget 2023.
As the Budget approaches, the first agenda item that appears overdue is the regulation of the cryptocurrency market. Bitcoin and other digital currencies have been in existence for more than a decade. Despite this, the government is still undecided about whether or not to regulate the market. 2023 appears to be the year when a decision should be taken on this front.
Pratik Gauri, Co-founder & CEO, 5ire, stated “Of course, the decline of trading volumes by as much as 85-90% is concerning, and the fear of not attracting investments in the Web3 innovative startups will impact the overall picture. But, as I have said earlier, the taxation of income and assets is entirely the purview of the government, and they have the exclusive right to impose and collect such dues.
What I feel is of utmost importance here is to remember that any monumental shift caused by Web3 will be the world shifting from a “value capture” economy to a “value creation” economy. This will require a new set of rules, which democratizes access to resources for creators and makes value creation as rewarding as capturing value. This means a direct relationship between the human capital and the consumers of its creation.
It is vital to ensure that any taxation regime does not hamper the development of India’s talent in Web3 and the supercharged innovative environment India has been experiencing recently.
The efforts to introduce the new CBDC show that the RBI and taxation regime are committed to innovation. We look forward to working with them to produce dApp, DeFi, and ReFi solutions that help.”
Ankit Wadhwa, Co-founder & CEO, Rario stated, “While 2022 has been a transformative year for the digital collectables industry, with the increasing popularity of digital trading cards and virtual digital assets with proof of ownership using blockchain technology, the industry size rose to approximately 426 billion USD in 2022 worldwide. We also believe that blockchain technology will help India to rise considerably in rank amongst the nations to be the undisputed world leader in this space. We hope that the G20 presidency is also used to push innovation in blockchain technology with India at the forefront.
We welcomed the carve-outs made by the Ministry of Finance in June 2022 in the definition of virtual digital assets (VDAs) that was introduced in the last budget in February 2022, excluding (a) tokens whose transfer results in the transfer of ownership of the underlying tangible asset; (b) gift cards or vouchers; (c) mileage points, reward points or loyalty card, being a record given without direct monetary; and (d) subscription to websites or platforms or application. We sincerely also hope for a further revision in the definition of VDAs in the upcoming Finance Bill separating crypto-based tokens from non-crypto-based tokens and separate tax regimes for each. Our digital player cards are on a custom-made Rario blockchain, where we have no reliance on cryptocurrency whatsoever and they can be purchased only through fiat currency.”
Preekshit Gupta, Vice President – APAC & MEA, Bureau, says “The Indian identity verification and fraud prevention industry is on the cusp of exponential growth, and we hope that the upcoming budget will be a catalyst for this growth. Regulatory and policy reforms such as the enactment of the Data Protection Bill and setting up a solid and effective data protection authority will ensure a conducive environment for the sector to thrive. We also expect the budget to provide financial incentives to boost innovation and encourage entrepreneurs to adopt risk orchestration solutions to tackle problems such as fraud prevention, data security, KYC compliance, and identity theft.
In the last few years, an increase in mobile internet penetration and innovation in the payments landscape has accelerated our pace toward a digital economy. However, these digital advancements have also generated unprecedented opportunities for criminals to perpetrate fraud. India is expected to have 900 million internet users by 2025, and there is a pressing need to secure our online presence, especially from fraudsters. We are therefore hopeful that the government will provide additional funding, incentives, and tax exemptions to incentivise companies to build a robust data security infrastructure that will fuel the government’s ‘digital India’ vision.
Furthermore, there is a need to focus on initiatives that will help build recognition of the need for robust identity verification systems & also drive consumer awareness to educate the society at large. This will go a long way in ensuring everyone has access to secure digital identities, thus enabling a secure digital economy. This is also in line with the government’s vision of making India a $5T economy in the coming years. All of these measures will not only help the industry but will also benefit the Indian economy as a whole. With Budget 2023, the cyber security industry may finally get the boost it needs to keep up with the ever-evolving digital landscape”.
Rahul Pagidipati, CEO, ZebPay, stated, “2022 has been a crucial year for the Web3 and crypto industry. Despite being a relatively new and untested market, the crypto industry has witnessed rapid growth in India with an increasing number of people showcasing interest to invest in the asset class. According to a report released by FICCI and EY in 2022, Web 3.0 and blockchain can add a staggering $1.1 trillion to India’s GDP by 2032.
In FY22, the government announced a 30% plus surcharge and cess as well as 1% TDS deduction on the transfer of Virtual Digital Assets. While it is great to see the government take a step towards regulating VDAs, in the upcoming budget 2023, we urge the government to create a progressive regulatory framework and offer clarity on taxation by reducing TDS and Capital Gains Taxes and levelling them with other asset classes such as stocks and bonds. This will address the ongoing concerns and uncertainty about the industry by creating transparency and helping industry players protect users from any kind of black swan events like the FTX collapse. Clear governance and regulatory framework will enable more people to invest in VDAs and attain financial freedom. It will also encourage innovation to transform existing businesses through blockchain technology as well as build newer solutions for the industry to thrive further”.
Nikhil Goyal, CEO & Founder, Beyond Imagination Technologies, says that “Blockchain technology can have a profound impact on several sectors as it has the potential to create cutting-edge solutions and serve as the foundation of India’s digital economy. It can play a vital role in India’s growth story by solving real-world problems. So, we hope that our country will see more adoption of blockchain technology in times to come and bring real impact, improve efficiency and make India a productive nation. Thus, we hope that the upcoming budget will provide an impetus to technological advancements, which can unlock significant opportunities for growth and economic development, and an opportunity for India to become the tech hub of the world.
In the budget 2023-24, we hope the government to provide a fair share towards technological advancement, focus on incentivizing or promoting tech to make India the talent hub of web3 for the world, a push to R&D to develop “Make in India” blockchain products for the world and position India as the epicenter of the tech developments.”