India’s Finance Minister Nirmala Sitharaman introduced the 2024-2025 budget on February 1, marking the first budget since Prime Minister Narendra Modi was re-elected for a third consecutive term. This interim budget precedes the national elections scheduled between April and June.
Crypto Tax Policies Remain Unchanged
In her budget address, Sitharaman kept the existing crypto tax rules intact. India’s crypto industry had lobbied for significant changes, particularly aiming to reduce the tax-deducted-at-source (TDS) on crypto transactions from 1% to 0.01%. Industry representatives presented evidence, including a think tank study, to support this reduction. They also advocated for progressive taxes on crypto gains instead of the current flat 30% rate and for the ability to offset losses against gains. Additionally, the industry has called for multi-agency regulation to better manage the sector.
Context of the Budget
This budget is notable as it is the first since Modi’s Bharatiya Janata Party (BJP) won a third term but failed to secure a majority, leading to the formation of a coalition government. The budget reflects Modi’s roadmap for the next five years, considering the sentiments from the unexpected election results.
Industry Reactions and Future Expectations
The crypto industry’s primary demands—reducing the TDS rate and allowing losses to offset gains—were not addressed in the new budget. This decision has sparked reactions from industry stakeholders who were hoping for more favorable tax policies to foster growth and innovation in the sector. The unchanged TDS rate is seen as a significant hurdle, potentially stifling the crypto market’s development in India.
Beyond the crypto sector, this budget outlines Modi’s vision for India’s economic future. The coalition government may face challenges in implementing its agenda due to the need for consensus among coalition partners. However, the budget aims to address key economic areas and set a strategic direction for the country’s growth over the next five years.
India’s 2024-2025 budget maintains the status quo on crypto taxation, leaving the industry’s demands unmet. As the country prepares for national elections, the budget reflects Modi’s broader economic vision, shaped by the need to navigate the complexities of a coalition government.
