India's Crypto Executives Advocate for Tax Revisions Ahead of Budget 2026

India's cryptocurrency sector is amplifying its demand for tax reforms as the Union Budget approaches, asserting that the existing tax structure is pushing trading activities to foreign platforms.

Key Takeaways:

Key players in the crypto industry are urging changes to the current 1% TDS and 30% VDA tax in Budget 2026 to prevent capital flight.
While the 2022 tax regulations enhanced transaction traceability, they significantly reduced domestic trading liquidity.
Executives caution that relying on foreign exchanges compromises consumer protection and leads to a loss of jobs and tax income.

Executives from prominent exchanges like WazirX and Delta Exchange assert that the government has a pivotal chance in Budget 2026 to revise its taxation stance by lowering the 1% transaction-level tax deducted at source (TDS) on cryptocurrency trades and reassessing the 30% tax imposed on profits from virtual digital assets (VDA), which currently does not permit the offset of losses.

India Crypto Tax Executives Push to Roll Back 1% TDS, Ease 30% Tax Ahead of Budget

Impact of India’s Crypto Tax: Traceability vs. Liquidity

In 2022, India implemented a 30% tax on VDA profits and a 1% TDS as part of a wider initiative to bring digital asset transactions under the taxation framework.

While these tax measures achieved better traceability of transactions, industry stakeholders indicate they resulted in adverse effects, such as a significant decline in domestic liquidity and a shift of traders to international platforms beyond Indian regulations.

"As India gears up for Budget 2026, there is a distinct opportunity to refine a regulatory framework that upholds transparency and compliance, while promoting innovation," stated Nischal Shetty, founder of WazirX.

He highlighted that reducing TDS and re-evaluating the rules for offsetting losses could help retain more economic activities within India’s regulated environment, without compromising oversight.

Executives believe that the global landscape of cryptocurrency has evolved considerably since the introduction of these tax policies, with more institutional investors coming in and clearer regulations emerging in several key markets.

The discussion also points to economic leakage as a significant concern. Delta Exchange estimates that Indian traders generated around ₹5 lakh crore in trading volume on foreign exchanges from October 2024 to October 2025.

When platforms operate outside India’s regulatory scope, executives warn, consumer protection declines and both employment opportunities and tax revenues are lost to other countries.

“Dependence on unaccountable foreign platforms for crucial financial infrastructure creates systemic risks,” cautioned Pankaj Balani, CEO and co-founder of Delta Exchange, advocating for a "Make in India" strategy that supports compliant domestic platforms while taking stern action against unauthorized ones.

Indian Tax Officials Express Concern Over Crypto Regulation

Recently, Indian tax authorities have reiterated their worries regarding cryptocurrency usage, suggesting that the rising adoption of digital assets might hinder the country’s capacity to effectively enforce tax regulations.

This concern was voiced by the Income Tax Department (ITD), part of the Central Board of Direct Taxes, during a recent parliamentary finance committee meeting.

Additionally, India has intensified its scrutiny of cryptocurrency exchanges, with the Financial Intelligence Unit imposing stricter identification and monitoring protocols designed to combat illegal activities.

These new guidelines obligate platforms to conduct comprehensive identity verification beyond just basic document submissions during account setup. They are also required to implement enhanced Client Due Diligence (CDD) processes, reflecting the urgency to address the speed and pseudonymous characteristics of crypto transactions.