Budget 2023: Experts Feel Web3 Being Left Out
Bureau Report
Majority of middle class taxpayers are relieved by this year’s Union Budget proposals, however, the flat 30% tax and 1% TDS on cryptocurrency have not changed though, thus the crypto business across the country haven’t experienced any relief.
The Union Budget delivered by Indian Finance Minister Nirmala Sitharaman on February 1, included significant modifications to the income tax bands. However, it gave no such relief to crypto traders and investors.
Industry ecosystem players opined that Finance Minister Nirmala Sitharaman, missed reference to virtual digital assets, blockchain or central bank digital currencies.
Several market observers, closely dealing in crypto as well as involved in the regulation of cryptocurrency have publicly expressed hope for a tax cut while privately believing it was doubtful and unlikely to even get acknowledged.
Well few believed this year’s budget would set a tone for the fledgling industry by extending sops. However, most of the expectations were watered down by this year’s budget proposals. Few things were worth mentioning though.
We spoke with market experts and industry observers on the Budget 2023 proposals:
Aruna Sharma, former secretary, Govt of India, pointed at a couple of important aspects from the Union Budget. In her assessment, one of the important things is the Government will focus on Infrastructure and emphasis on digitization. She said, “These two are plus points…..umbrella kind of a thing….the digital economy will be a center stage.” However, no relief on 30% Tax and 1% TDS is the major concern for virtual digital assets.
Sharma also lauded the Budget proposal on online gaming sector and efforts to enhance agriculture storage. “E-Gaming-The technical designing of the game permits you to have filters. Agriculture & Tools for enhancing them are very welcome,” Sharma added.
Database of land, plantation, kind of cropping pattern, production, etc. falling under the purview of blockchain technology is a great opportunity and this is something one looks forward to. This marriage is going to be a long way provided it is handled in a due spirit, quipped Sharma.
Prasanna Lohar, CEO Of Block Stack, said “Last year’s budget was typically about Digital India Momentum and this budget talks more about how we’re going to create the next India.”
He went on to add, “Next India will be mark by clinTech, SAP Industry 4.O, Creation of skills, UPI and DigiLocker. Furthermore announcements around agriculture and many more others. But considering technology, I think this budget has emphasize more on emerging technologies and making India ready for the next wave of Digital Adoption.”
Toshendra Sharma, Founder NFTically, seconded some of the aspects of Lohar. While describing the Budget internals he said, “India may raise the issue of VDA regulation during its G-20 presidency.”
Meanwhile, the budget extended cold shoulder to cryptocurrencies or the virtual digital assets (VDA) traders. Forget about providing tax relief, the budget didn’t find worth mentioning about VDA. Apparently, few dejected voices emanated from the crypto ecospace.
Sumit Kochar, Partner, Ahlawat & Associates, said in context of VDAs “Investors speculated tax to be reduced from 1% to 0.1% or 0.01%. No optimization for the tax regime in crypto in India.” He is feared of monies leaving the shore. “Indian investors are moving their crypto holdings and wallets to overseas exchanges, they’re losing track of the holdings. This is not favorable to Indian investors,” exclaimed Kochar.
Further, he said, “No set off on tax is not favorable for Indian investors”. There are 20 million Crypto users in India, and their fate is left in lurk.
Kochar was joined by Upmanyu Banerjee of Ahlawat & Associates, in raising concern over capital flight. Banerjee said, “The Government is still not on board or has a common opinion of dealing with VDAs”. He asserted several aspects including the need for VDA regulations in consultation with industry players as well as regulatory framework.
Gaurav Mehta, Founder & CTO, Catax, said “It is not surprising that crypto taxes have not been revised. Cryptocurrency has always been a concern for the government, but since the implementation of taxes in 2022, the situation has worsened – Rs 32,000 crores India funds being transferred to international exchanges without tax disclosure and collection may have reaffirmed the government’s hypothesis and therefore they did not pay attention to the crypto economy.”
Meanwhile, Raunak Karwa, Founder & CEO – Finlearn Academy termed the Union budget as an inclusive one with a focus on most sectors. The allocation on Education has been hiked by 13% to Rs 5.17 Lakh Crore.
The announcement under Pradhan Mantri Kaushal Vikas Yojana (PMKVY) for skilling of youths. The 30 new Skill India International Centers across different states will help develop talent and thereby output. The AI centers will help the acceptability of machine learning.”
Recently, Nirmala Sitharaman urged professionals to explore new technologies, terming it to be the beginning of a new era. She went on to add that web 3.0 is changing the way financial information should be handled. Following the statement, crypto industry turned optimistic.
Interestingly, since India assumed the presidency of the G20 summit, we might be moving towards a more favorable ecosystem for crypto in general. Most importantly, India has started 450 web3 startups with an average inflow of 1.3 billion dollars in 2022 according to DYDX foundation.
According to media reports there are over 75,000 blockchain employees working in India, raking 3rd in the global list of employers.
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