BackReduce tax burden, cut TDS to 0.1%: What CoinSwitch's Ashish Singhal expects from Budget 2023
‘The imposition of a flat 30% tax on capital gains from such investments came without basic exemptions where there is no provision for carry forward losses,’ the CoinSwitch CEO said
PremiumIf the tax deducted at source aims to establish a trail of cryptocurrency transactions, it can be achieved by a lower TDS rate of 0.1%, CoinSwitch CEO and co-founder Ashish Singhal told Livemint.
Currently, an individual pays a 30% tax on withdrawal and an additional 1% TDS on the transfer of crypto assets in India. It was introduced by Union Finance Minister Nirmala Sitharaman in Union Budget 2022.
“The imposition of a flat 30% tax on capital gains from such investments came without basic exemptions where there is no provision for carry forward losses," the CoinSwitch CEO said.
Explaining further, Singhal said, “The additional 1% TDS imposed on every sell transaction has had a compounding effect on high-frequency traders, who are a key source of liquidity in the market, resulting in capital being locked up at every trade."
“Over the last year, it has become apparent that these measures that were duly taken to promote transparency and compliance have instead incentivised users to shift their activity to offshore exchanges and unregulated markets," he said.
As a consequence, the CoinSwitch CEO believes, the government stands to lose revenue, and its ability to monitor and regulate transactions related to cryptocurrencies.
While the legal status of cryptos in India is still ambiguous, last year's budget had set the stage for taxation of Virtual Digital Assets (VDAs).
The Bengaluru-headquartered unicorn is one of the country's largest cryptocurrency exchanges with 19 million users.
The crypto exchange reckons that the government should “incentivise users" to stay within national jurisdiction by reducing the burden of taxes.
"Similar to listed securities, existing provisions of capital assets should be made applicable for VDAs. To make India a competitive country in the growing crypto industry, tax authorities should allow carrying forward and setting off losses incurred from the sale of VDAs, similar to how it is done for capital gains," Singhal noted.
The CoinSwitch CEO says this year's upcoming Budget should be about implementing progressive taxation policies. “While last year’s Union Budget recognized the increasing popularity of Virtual Digital Assets, this year should be about implementing progressive taxation policies," he added.
The cryptocurrency sector is pinning its hopes on FM Sitharaman for a crypto-friendly Union Budget this time.
Industry leaders are eagerly looking forward to this year's budget and what it holds for cryptocurrencies and crypto exchange platforms.
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