Nederlands
English
Deutsch
Français
Español
Português
Industry Leaders Push for Tax Reforms Ahead of Budget Announcement
As Finance Minister Nirmala Sitharaman prepares to present India's Union Budget 2026 on February 1, the country's cryptocurrency industry is making a strong push for significant tax reforms and regulatory clarity. Industry executives argue that the current tax framework, introduced in Budget 2022, has completed its initial purpose and now needs fine-tuning to support sustainable growth.
The Current Tax Burden
Currently, Virtual Digital Assets (VDAs) in India face a dual tax burden: a flat 30% tax on profits and a 1% Tax Deducted at Source (TDS) on every transaction. This framework, while generating substantial revenue for the government (₹437 crore in FY24 and over ₹500 crore TDS in FY25), has had unintended consequences. 'The 1% TDS has created significant friction for traders and driven billions in trading volume to offshore platforms,' says Nischal Shetty, CEO of WazirX.
Key Demands from the Industry
The industry's primary demands include reducing the 1% TDS to 0.01% or 0.1%, reviewing the flat 30% capital gains tax to align with income tax slabs, and allowing loss set-offs. 'We need a calibrated approach that reduces transaction friction while maintaining compliance reporting,' explains Sumit Gupta, CEO of CoinDCX. 'The current framework has pushed liquidity away from compliant Indian exchanges to offshore platforms that don't follow Indian regulations.'
Industry leaders emphasize that with enhanced anti-money laundering measures now in place, compliance infrastructure is robust enough to support these reforms while maintaining oversight. 'India has one of the world's largest digital asset adoption rates, but our tax policies are driving capital flight instead of fostering innovation,' notes Raj Karkara, Chief Operating Officer at ZebPay.
Global Context and Market Impact
The crypto market experienced significant volatility in 2025, with Bitcoin reaching $100,000 before corrections. India's crypto industry believes Budget 2026 presents a critical opportunity to recalibrate policy. According to industry reports, the value of crypto transactions in India reached ₹50,000 crore in 2024-25, highlighting the sector's growth potential.
Regulatory Clarity and Future Outlook
Beyond tax reforms, the industry seeks clear regulatory guidelines for permissible activities and compliance standards. 'We need a single-window regulatory approach that differentiates compliant domestic platforms from non-compliant offshore operators,' says an industry representative from Binance India. The sector hopes for policies that would enhance investor confidence, improve compliance, and support responsible innovation.
With India ranking among the world's largest digital asset adoption markets, industry executives believe thoughtful policy adjustments could nudge crypto activity toward compliance rather than offshore platforms, leveraging India's strong grassroots crypto adoption while ensuring investor protection and state revenue.
