Expectations from Budget 2022 – How can the crypto industry benefit from this budget?

The Budget for 2022 is scheduled to be discussed on 1 February 2022. With a lot of expectations surrounding it, the crypto industry has kept its hopes strong. 

With a considerable amount of mentions and discussions that have taken place last year, crypto experts have certain expectations this time from Finance Minister Nirmala Sitharaman’s Budget 2022 speech.

Expectations from Budget 2022 – Crypto

• The most awaited crypto bill could be heard in this budget session. With crypto becoming the new buzzword in the investment industry, there is a necessity to have a well-defined rule book to guide the citizens of India and remove the ambiguity around it. Lack of regulation is hindering the growth of crypto, and this bill can definitely serve the purpose.
• A separate ministry could be set up to oversee crypto-related activities.
• Income tax and GST are commonly heard off. However, the definition of Income for Income Tax and Supply in GST laws needs modification to include crypto, NFT and its related avenues. In this budget, we can expect modifications in these definitions to bring crypto-related income under the purview of taxation. On the flip side, a new taxation module for crypto income could be possible as well. A forward-looking tax regime can encourage and boost innovations in the sector.
• Over the last year, we have heard over and over again that crypto can be considered a digital asset and not currency. This budget could give us clarity on the classification of crypto.
• TDS, TCS and equalization levy provisions for crypto trading can be expected.
• Blockchain holds tremendous value. While private entities are considering this technology, various Governments (like Maharashtra & Telangana) have also achieved milestones with this. While the previous budgets focused more on financial inclusion, experts suggest that this budget will focus on the country’s economic development by employing new tools and technologies, with blockchain being one among them. This budget could set the platform for blockchain innovations by supporting startups and businesses that implement blockchain technology. Incentives, tax holidays, exemptions and much more could be possible.

While there is much more possible, investors and the industry as a whole are looking forward to a basic regulatory framework to get started with.  Progressive crypto regulations will definitely lead to an innovative financial ecosystem! 

A commoner’s appeal

While regulation is the most required thing right now for the crypto industry, every common man has their share of worries. What about the past transactions? Will I be penalised? Will I have to pay a heavy amount as tax? In this regard, here are a few commonly heard appeals:

• A prospective and not retrospective taxation approach will be preferred.
• Traders should not be penalized for lack of clarity in the past.
• A one-time amnesty scheme to declare entire crypto holdings and pay tax on the net income would be ideal.