The Bharat Web3 Association (BWA) met with industry stakeholders in New Delhi on July 11, ahead of the upcoming budget announcement for FY2024-2025. During the meeting, Dilip Chenoy, the chairperson of this Web3 advisory body, said that the industry is ready to be patient and give the government enough time to access the results of imposing crypto taxes. He did, however, express concerns that this period of analysis is driving India’s Web3 circle offshore at a rapid pace.
Chenoy, in conversation with the media, said that the existing taxes on cryptocurrencies have not achieved the intended purpose of keeping track of these financial transactions, that are otherwise largely anonymous. Rather, Chenoy said, these taxes are incentivising India’s Web3 community to flock to other readily available channels through which, notorious elements could still dabble in illicit activities.
“The use of blockchain-related technologies in the enterprise sector has risen in recent times. India boasts over 900 firms operating from within its Web3 sector. Forecasts anticipate the sector to add $1.1 trillion to India’s GDP over the next decade, by 2032. We hope that the government rationalises the taxation framework applicable to digital assets in the upcoming union budget,” the BWA said.
Suggested Changes for Crypto Tax in India
Chenoy, alongside BWA co-directors R. Venkatesh and Kiran Vivekananda said that they have had multiple chances to discuss the future of Web3 with government officials in recent times. Several pro-growth suggestions from the BWA have been presented to the government for consideration.
The reduction in TDS on each crypto transaction from one percent to 0.01 percent has been one of the suggestions. The BWA believes investors and entrepreneurs linked to the sector must be able to save something after tax cuts, that gives them opportunities to invest further. The BWA has urged the finance ministry to allow traders of virtual digital assets (VDAs) to offset losses with gains made elsewhere.
In addition, the advisory body has adviced that the threshold limit for deduction of tax at source for crypto gains should be increased to Rs. 5 lakh from the existing range of Rs. 10,000 to Rs. 50,000.
“India is set to become a Web3 powerhouse despite regulatory uncertainties. The country should not lose the opportunity to become a leader in Web3 because of regulatory delays,” the association noted.
Chenoy said the government has not responded to their suggestions yet.
BWA’s Take on Web3 in India
Despite India’s scrutiny over cryptocurrency-related activities, the country has maintained a positive stance around exploring the blockchain technology.
In recent times, players from India’s clinical research sector, ecommerce businesses, as well as the railways industry have dabbled with Web3. The BWA has applauded the exposure of India’s enterprise industry with blockchain-related technologies.
While the BWA has observed a trend in the rising number of startups and enterprise usecases of blockchain technologies, it has also noted a drop-dead silence around the crypto mining industry in India so far. The association has called for discussions around the same in the months to come, especially now that several parts of the world are allowing crypto mining operations to open more employment opportunities in the regions.
Talking about India’s eRupee CBDC, the BWA leaders said, Indians are already accustomed to using the UPI here and so the eRupee is not likely to become a buzz. In other nations, however, the use of CBDCs may have more impact among the masses in terms of facilitating peer-to-peer payments, the BWA predicts.