The expectations of millions of cryptocurrency holders in India were dashed when the country’s 2023 federal budget did not include any reference to cryptocurrencies or the technology known as blockchain. Many people in the cryptocurrency community in India had high hopes that the heavy cryptocurrency tax that was put in place in March 2022 would be lowered somehow.
Nirmala Sitharaman, India’s Finance Minister, delivered the union budget on February 1, during which she announced many significant changes to income tax bands. However, in the course of the discussion, the minister did not talk about cryptocurrencies, digital currencies issued by central banks, or blockchain technology. Starting the previous year, India imposed a 30% tax on crypto profits and a 1% tax deducted at source (TDS) on all crypto transactions, effectively halting a growing business almost immediately.
The main purpose of imposing a TDS on each and every cryptocurrency transaction was to compile an accurate count of the number of Indian people who are now involved in the use of cryptocurrency. From May 2023, the government will be able to access information related to this data when Indians file their income tax forms.
Within ten days of the implementation of the new fiscal policy, trading volume on major cryptocurrency exchanges in India plummeted by 70 percent and dropped by almost 90 percent over the next three months. Cryptocurrency traders were forced to use offshore exchanges, and cryptocurrency startups were forced to relocate out of India as a result of the country’s strict tax policy.
India’s previous Finance Secretary Subhash Chandra Garg said earlier that there should be much more clarification on crypto taxes. He said the next budget for 2023 may not include any new changes. In addition to this, Chandra was the head of the committee responsible for drafting the first crypto law.