The expectations of millions of cryptocurrency holders in India were dashed when the country's federal budget for the year 2023 included no reference to cryptocurrencies or the technology known as blockchain. Many people in the cryptocurrency community in India had great hopes that the hefty cryptocurrency tax that was established in March 2022 will be lowered in some way.
Nirmala Sitharaman, the Indian Minister of Finance, delivered the union budget on February 1st, during which she announced many significant modifications to the income tax bands. However, over the course of the discussion, the minister did not discuss cryptocurrencies, digital currencies issued by central banks, or blockchain technology. As of the previous year, India imposed a tax of 30% on crypto earnings and a tax of 1% deducted at source (TDS) on all crypto transactions, which effectively put a stop to a growing business almost immediately.
The major goal of imposing a TDS on any and all cryptocurrency transactions was to compile an accurate count of the number of Indian people who are now engaging in cryptocurrency use. Beginning in May 2023, the information pertaining to this data will be made accessible to the government when Indians submit their income tax forms.
Within ten days of the new tax policy being implemented, the trading volume on major cryptocurrency exchanges in India plunged by 70 percent, and it dropped by almost 90 percent over the next three months. Cryptocurrency traders were driven to use offshore exchanges, and nascent cryptocurrency ventures were compelled to relocate outside of India as a result of the country's stringent tax policy.
The previous Finance Secretary of India, Subhash Chandra Garg, said before that there should be a great deal more clarification about crypto taxation. He said that it was possible that the forthcoming budget for 2023 would not include any fresh modifications. In addition to this, Chandra was the head of the committee that was responsible for writing the first crypto law.