Key Takeaways
- India’s crypto industry is pressing for tax relief ahead of the Union Budget, calling current rules punitive and growth-killing.
- Exchanges and platforms want lower TDS, loss set-offs, and a rethink of the flat 30% tax to stem offshore migration.
- Despite strong lobbying, major relief appears unlikely as the government continues to view crypto as speculative and revenue-sensitive.
As Finance Minister Nirmala Sitharaman prepares to unveil India’s Union Budget on Feb. 1, 2026, one sector is watching more closely than most: crypto.
Four years after India formally brought digital assets into the tax net, the country’s crypto industry says the framework meant to regulate the space has instead pushed it offshore.
With trading volumes migrating abroad and domestic exchanges struggling for liquidity, industry leaders are urging the government to use Budget 2026 as a reset moment—one that balances oversight with growth.
Whether New Delhi is willing to listen remains an open question.
Why Crypto Taxes Are Back in Focus
India’s current crypto tax regime dates back to the 2022 Union Budget, which classified cryptocurrencies and NFTs as Virtual Digital Assets (VDAs).
While the move brought long-awaited legal recognition, it also introduced one of the world’s toughest tax structures.
Crypto gains are taxed at a flat 30%, plus surcharge and cess. Losses cannot be offset against gains or carried forward.
On top of that, a 1% Tax Deducted at Source (TDS) applies to most transactions, regardless of profitability.
Industry players argue this combination has drained liquidity from Indian crypto exchanges and driven traders to offshore platforms.
Estimates suggest trillions of dollars in trading volume have moved abroad since 2022, reducing both compliance and visibility for regulators at home.
With India positioning itself as a future hub for fintech and Web3 innovation, the industry believes the disconnect has become impossible to ignore.
What India’s Crypto Industry Is Asking For
Ahead of Budget 2026, crypto firms have coalesced around a set of clear, recurring demands.
Key demands include:
- Reducing TDS from 1% to much lower levels (e.g., 0.01% or 0.1%).
- Raising the TDS threshold (e.g., to ₹5 lakh) to ease the burden on small investors.
- Allowing loss set-off and carry-forward.
- Reviewing or rationalizing the flat 30% tax (e.g., aligning with income slabs, capital gains rules, or other assets like equities).
- Providing more precise definitions, regulatory frameworks (e.g., under SEBI/RBI), and guidelines for emerging assets like NFTs.
Supporters say these changes would encourage onshore trading, improve KYC and AML oversight, and reduce the brain drain to jurisdictions like Dubai and Singapore.
Voices From India’s Crypto Industry
Crypto firms have made their case forcefully in pre-budget submissions and public commentary.
Edul Patel, CEO of Mudrex, told CCN that modest tax tweaks could go a long way toward restoring confidence.
“As we approach the Union Budget FY27, there is an opportunity to adopt a more balanced and forward-looking approach. Reducing TDS to 0.1% and allowing loss offsetting would ease friction for investors, improve transparency, and support the long-term, sustainable growth of India’s crypto industry.”
CoinDCX CEO Sumit Gupta has echoed similar concerns, calling for a reduction of TDS to 0.01%, loss offsetting, and a review of the 30% flat tax.
He has argued that the current structure violates basic principles of tax equity and has contributed to a 70–90% collapse in volumes on Indian exchanges since 2022.
ZebPay and other platforms have also warned that without reform, India risks losing its position as one of the world’s largest crypto user bases—not because of a lack of demand, but because of policy friction.
Will Budget 2026 Deliver Relief?
Despite the lobbying, expectations remain cautious.
Analysts note that the government has consistently framed crypto as a speculative asset, often comparing it to gambling rather than investment products like equities or mutual funds.
Revenue stability and financial-system risk continue to weigh heavily in policy decisions.
Past budgets have largely maintained the status quo, focusing instead on compliance and reporting.
As a result, observers believe sweeping tax cuts are unlikely this year. Incremental changes—such as raising TDS thresholds, refining definitions, or offering minor procedural relief—are seen as more realistic.
Still, industry leaders argue that even small steps would send a powerful signal.
India remains one of the world’s largest crypto markets by adoption.
Whether Budget 2026 chooses to nurture that momentum—or continue taxing it into offshore obscurity—will shape the country’s digital-asset future for years to come.
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Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
