Call for Tax Reform and Regulatory Clarity
The Indian cryptocurrency industry is advocating for a more favorable tax structure in the upcoming budget for 2026. Beyond tax reforms, the industry is also seeking clear regulatory guidelines for digital assets. A key demand is the rationalization of the existing 1% Tax Deducted at Source (TDS) on crypto transactions, which the industry believes will foster investor confidence and attract greater foreign participation.
In the previous Union Budget 2025, the finance minister maintained the existing tax frameworks for Virtual Digital Assets (VDAs), despite repeated appeals from the industry for changes.
Stakeholders within the Indian crypto industry have consistently argued that the current tax rules have deterred investors and traders from utilizing domestic crypto exchanges. They express concerns that significant capital may be shifting to overseas platforms due to these regulations.
Background: India's Current Crypto Tax Framework
India officially recognized cryptocurrencies as Virtual Digital Assets (VDAs) in its Budget 2022, establishing a defined tax regime that year. Under the Income Tax Act, VDAs, including cryptocurrencies, NFTs, and other digital tokens, are subject to taxation.
Currently, gains derived from VDAs are taxed at a flat rate of 30%. Additionally, a 1% TDS is levied on all crypto transactions. Income from non-trading activities is taxed according to an individual's applicable income slab.
Industry Perspectives on Budget 2026
Raj Karkara, Chief Operating Officer at ZebPay, highlighted that Budget 2026 arrives at a pivotal moment for India's crypto industry. He expressed anticipation for clarifications that will instill confidence among investors and stabilize the market. Karkara views this as an opportune moment to introduce a clear and consistent roadmap for the crypto sector.
Nichal Shetty, founder of WazirX, stated that the upcoming budget presents an opportunity for the country and its regulators to re-evaluate existing rules. He emphasized the need for the government to address the TDS provisions and permit loss set-offs, which he believes would enhance liquidity and improve compliance. Shetty also noted that clear reporting guidelines would significantly boost investor confidence.
Pankaj Balani, CEO and co-founder of Delta Exchange, asserted that the current trajectory of crypto adoption in India necessitates a well-defined approach. Balani stressed the importance of regulators supporting compliant domestic platforms while taking action against illegal operations. He argued that policy should clearly distinguish between compliant Indian platforms and non-compliant offshore entities.
Summit Gupta, co-founder of CoinDCX, pointed out that the sector has been seeking measured relief, particularly over the four years the current tax framework has been in effect. He suggested that any regulatory decisions made now should foster innovation within India and position the country as a global leader in Web3 and VDA technologies. Gupta called for unambiguous rules and the implementation of TDS across all crypto exchanges.
SB Seeker, Head of APAC at Binance, observed that the growing adoption of crypto in India demonstrates the potential of the digital economy and the increasing participation of retail investors. He believes that Budget 2026 offers regulators a chance to safeguard users and maintain financial stability through appropriate regulatory measures.