Indian Cryptocurrency Agencies Demand Tax Reforms Ahead of Union Budget

Indian Cryptocurrency Industry Seeks Tax Reforms Ahead of February Budget

The cryptocurrency industry in India is renewing its calls for tax reform as the country approaches its union budget in February. Industry leaders argue that the current tax framework, which includes a 30% tax on cryptocurrency gains and a 1% tax deducted at source (TDS) on most transactions regardless of profitability, discourages local activity amid rising regulatory compliance requirements. Currently, losses from trades cannot be used to offset gains.

Executives from major exchanges in the country contend that the existing tax regime, particularly transaction taxes and restrictions on offsetting losses, no longer reflects the evolution of the global digital asset market or India's advancements in regulatory oversight and law enforcement. This renewed demand comes as policymakers finalize tax priorities for the upcoming financial year. India’s Union Budget, set to be presented on February 1, is viewed as one of the few opportunities for significant tax recalibration without new legislation.

Representatives from exchange platforms argue that the constant pressure on compliant platforms risks driving liquidity, users, and innovation abroad, undermining the regulatory objectives set forth by authorities. Nischal Shetty, founder of exchange WazirX, stated that India has the opportunity to refine its cryptocurrency framework to balance enforcement with innovation. "As India prepares for Budget 2026, there is a clear opportunity to adjust a framework that supports transparency and compliance while promoting innovation," he added.

Raj Karkara, Chief Operating Officer of exchange ZebPay, emphasized the significance of the upcoming budget, calling it a "crucial moment" for the sector. "Streamlining the current 1% TDS on cryptocurrency transactions could significantly enhance liquidity and encourage stronger domestic participation," he said.

SB Seker, head of APAC at Binance, asserted that the impending budget presents a chance to recalibrate India’s tax framework in line with growing consumer engagement. This would foster a more predictable investment environment. "Clear and consistent operating standards for VDA platforms, aligned with India’s investor protection priorities, will encourage responsible capital investment and create skilled jobs," added Seker.

These calls for tax reform come amid increasingly stringent compliance requirements imposed on cryptocurrency platforms in India. Recently, the Financial Intelligence Unit of India introduced new Know Your Customer rules, mandating user verification through live checks, geolocation, and IP tracking. Furthermore, tax authorities have expressed concerns regarding the impact of the digital asset sector on law enforcement.