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Below the Quote on Expectations from Union Budget 2024 - Web3/Blockchain Sector by Manhar Garegrat, Country Head India & Global Partnerships, Liminal Custody

Finance Minister Nirmala Sitharaman is scheduled to present the Union Budget in July. For us at Liminal Custody, it is important that the upcoming budget addresses key issues in India's virtual digital asset (VDA) sector - primarily around taxation. As part of several other jurisdictions that we operate in as licensed and regulated custody service providers, we see regulators encouraging the growth of this nascent sector and we feel India’s economy can tremendously benefit by rationalizing taxation for digital assets.

The biggest challenges for the digital asset market in India are 1.) the absence of long term & short term capital gains, 2.) an extremely high withholding tax that hampers tradeability and 3.) the inability of investors to offset their losses against gains. We feel the potential benefits of rationalizing these tax components to reasonable levels are significant and can promise a brighter future for India’s booming economy. This will help both the government as well as market participants ride the global wave of investments in digital assets. Many jurisdictions are making rapid progress in this area, and we hope the Indian government will also adopt a rational approach to resolve these issues.

We hail some of the efforts made by the Government of India, especially around the  FIU-registration of blockchain and VDA firms in order to offer a more secure platform for institutional investors. This has been a significant move and has provided the much needed legitimacy to the sector. We hope the honorable Finance Minister will continue with progressive developments for the sector by addressing the tax related issues in the upcoming Budget 2024-25.

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