Is the Indian government ready to abandon the crypto market? No mention of cryptocurrencies in 2024 federal budget, strict taxes to continue

India’s Union Budget for 2024-25, unveiled on July 23 by Finance Minister Nirmala Sitharaman, has left the cryptocurrency community in a state of uncertainty. Despite prior speculation, the budget failed to address digital currencies.

Ignored Digital Currency

The budget prioritises economic growth areas such as agriculture and employment but neglects the burgeoning field of virtual currencies. This omission is viewed as a missed opportunity to foster innovation and attract investment.

The Indian digital currency community has expressed shock and concern. Developer Vijay Saran, among others, criticised the budget on social media platform X for failing to mention digital currency.

Unchanged Tax Framework

While the budget proposes significant changes like eliminating angel tax for startups and adjusting the equalisation levy, it leaves the 2022 digital currency tax framework intact. Cryptocurrency transactions remain taxed at 30%, with an additional 1% tax deducted at source (TDS).

The 2022 tax measures are among the strictest globally, severely affecting digital currency exchanges and investors.

The National Academy of Legal Studies and Research (NASLAR) reports a 97% drop in trading volumes and an 81% decline in active user participation since the tax implementation.

Trade Volume of Top 6 Indian Exchanges. Source: NSLAR

Economic Consequences

NASLAR estimates these tax measures cost the national treasury 59 billion Indian rupees ($700 million) annually. Their study suggests that reducing TDS to 0.01% could potentially double government revenue from the industry.