Industry insiders are looking forward to reforms that could strengthen India’s deep tech and digital asset industries as Budget 2024 draws near. Will Nirmala Sitharaman, the finance minister, make the adjustments required for growth?

The Anticipation and Importance of the Budget

As the Finance Minister, Nirmala Sitharaman continues to lead the government led by Prime Minister Narendra Modi, which has secured a third term in office. There are a lot of expectations for the Union Budget for FY2024–25, which is scheduled to be announced on July 23, 2024. Leaders in the industry are expressing their hopes for significant reforms that might spur expansion in the rapidly expanding tech industries.

Support for the Deep Tech Ecosystem

Co-founder and managing partner of Seafund Manoj Agarwal highlights the importance of increasing funding for the deep tech ecosystem. In order to encourage investors in deep tech projects, he proposes the establishment of a fund of funds, which might propel the development of novel goods in India. Agarwal also advocates for investors, SMEs, and startups to pay less in taxes. He makes similarities to European nations and points out that a lot of them reward investors who fund new businesses. Similar laws would encourage more domestic investment in the startup sector in India, following the lead economies’ examples.

Tax Reductions and Regulatory Clarity for VDAs

The Bharat Web3 Association (BWA) Chairman, Dilip Chenoy, emphasizes the significance of tax breaks and clear regulations for the virtual digital assets (VDA) industry. The BWA has suggested enabling the setting off of losses on one VDA transaction against profits on another, as well as lowering the transaction tax from 1% to 0.01%. According to Chenoy, the Indian VDA industry has suffered from a lack of regulation, which has led business owners to transfer to jurisdictions that are more supportive of VDAs. In order to secure the sector’s expansion and generate new possibilities and revenue streams, he impels the government to enact industry-friendly legislation and tax reforms.

The country head of Liminal Custody’s India and global partnerships, Menhar Garg, is a supporter for simplified taxation in the VDA sector. The lack of a distinction between short- and long-term capital gains, the high withholding tax, and the inability to offset losses against profits are the three main issues he points out. According to Garg, reducing these elements to realistic levels can ensure that India’s economy has a more promising future. He commends the government’s efforts, pointing out that the industry now has credibility thanks to the recent registration of blockchain and VDA companies. Garg anticipates that tax-related difficulties would be addressed in the next budget, which will help the sector grow even more.

Comprehensive Regulatory Framework for VDAs

The CEO of BuyUCoin, the second-oldest digital asset exchange in India, Shivam Thakral, highlights the detrimental effects on the sector of the present 1% TDS and 30% VDA gains tax. Thakral is an advocate of a thorough regulatory framework for the VDA sector, which would guarantee equal opportunities for all enterprises, domestic and foreign. He points out that the absence of particular rules has forced Web3 and VDA companies offshore, depriving regional companies of funding sources and investor protection.

Thakral calls on the government to consider these factors when formulating the regulatory framework for the VDA market. Supportive laws are crucial to facilitating growth and unlocking the full potential of the Indian market. As the Union Budget looms, industry experts are hopeful that the government will introduce regulations that foster innovation, attract investment, and ensure the long-term growth of emerging industries in India. The upcoming budget holds the potential to set the stage for a transformative phase in the Indian economy, driven by advancements in technology and digital assets.

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