In the latest fiscal proclamation for 2024-2025, India’s Finance Minister Nirmala Sitharaman declared the preservation of existing crypto tax regulations, a move anticipated earlier.

A paramount plea from India’s cryptocurrency sector involved the reduction of the contentious tax-deducted-at-source (TDS) on crypto transactions from 1% to 0.01%. The industry presented comprehensive evidence, including a study by a think tank, advocating for the reduction of TDS. Additionally, the sector urged the government to introduce progressive taxation on gains rather than a flat 30% rate and to permit losses to offset gains. The call for multi-agency regulation also featured prominently.

Dilip Chenoy, Chairperson of the Bharat Web3 Association, expressed mild disappointment over the unchanged taxation on Virtual Digital Assets (VDAs), though he acknowledged the government’s generally unfavorable stance towards the sector. “We will persist in advocating for a rationalized tax framework,” he stated.

In a notable fiscal adjustment, the government escalated long-term capital gains tax from 10% to 12.5% and short-term capital gains tax from 15% to 20%. The implications for crypto trading remain uncertain. Rajat Mittal, a Supreme Court counsel on crypto tax matters, observed, “The hike in capital gains taxes might push retail investors towards cryptocurrencies, yet it’s crucial to remember that crypto gains are subject to a flat 30% tax, with no provisions for offsetting losses.”

On a positive note, the abolition of the angel tax for all investor categories was welcomed as a significant boost for the Indian startup ecosystem, particularly in the Web3 domain. Sumit Gupta, co-founder of CoinDCX, highlighted the potential uplift for the tech startup sector, emphasizing India’s burgeoning Web3 talent.

The budget, the first since Prime Minister Narendra Modi’s re-election for a third term, reflects his vision for the next five years amidst the complexities of forming a coalition government following an unexpected electoral outcome. Among the key initiatives, financial allocations include Rs 26,000 crore ($3.1 billion) for road projects in Bihar and Rs 15,000 crore ($1.8 billion) for state capital development in Andhra Pradesh, aimed at bolstering alliances within the coalition.

This budgetary outline is viewed as a strategic framework addressing the sentiments revealed by the recent election results.