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Minister’s Assertions that Crypto is Not Illegal in India Raises Expectations from Upcoming Budget

Ahead of the upcoming annual budget which is to be presented on February 1, an Indian government minister has raised hopes that the government would go soft on crypto regulation and may reduce the existing 1% crypto transaction tax to a reasonable level.

Rajeev Chandrasekhar, Minister of State for Electronics and IT, said at an event in India’s IT hub Bengaluru, “There is nothing today that outlaws crypto as long as you follow the legal process.”

As of now, cryptocurrencies are not illegal but the government has not framed any law for this sector. It makes cryptocurrencies fall in a legal grey area where one is never sure what is lawful.

However, the intent of government on matters related to cryptocurrencies is hawkish and unfriendly. In the last budget, the Indian government introduced two new taxes exclusively for the cryptocurrency sector — a 1% transaction tax on virtually all crypto transactions and 30% tax on gains made on crypto transactions. To make the matter worse, losses on other crypto transactions are not allowed to be offset against the profits made on some other crypto assets.

“Notably, through our representation for the upcoming Union Budget 2023 – 2024, we have suggested that the rate of TDS be brought down to 0.01%. This lower rate will help Indian VDA businesses offer competitive prices to Indian VDA users and protect them from exposure to unregulated foreign exchanges,” said Sumit Gupta, Co-founder and CEO of CoinDCX.

The Governor of Reserve Bank of India (RBI), Shaktikanta Das, has recently hogged media headlines for claiming that next financial crisis could be due to cryptocurrencies if they are allowed to grow by providing regulations.

The Indian minister’s assertion that cryptocurrencies are not illegal raises the hope that the government’s crypto policy, or a possible crypto regulation, could be more nuanced.

Indian crypto exchanges and investors have been demanding the 1% crypto transaction tax to be reduced to 0.01%.

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