Crypto Leaders Urge India to Reassess 30% Tax and 1% TDS Ahead of Budget 2026

As India approaches its Union Budget for 2026, the country's cryptocurrency industry is pressing for a review of its stringent tax policies. Executives from leading exchanges are advocating for changes that would improve liquidity and promote compliant trading within India.

Key Takeaways

India's crypto executives are requesting reductions in the 1% Tax Deducted at Source (TDS) on transactions and a reassessment of the 30% tax on gains from virtual assets.
Industry leaders argue that updated tax frameworks are essential for fostering a healthy digital asset ecosystem and encouraging investor confidence.
With regulatory measures tightening recently, there is a push for clearer policies to facilitate innovation and participation in the crypto market.

Crypto Leaders Urge India to Reassess 30% Tax and 1% TDS Ahead of Budget 2026

Advocating for Tax Reform to Boost the Web3 Ecosystem

Nischal Shetty, the founder of WazirX, shared with Cryptonews that the Union Budget presents a pivotal chance to refine regulations that can enhance transparency and compliance while nurturing innovation. He emphasized that the current regulations need review, especially after the significant growth of Web3 globally, facilitated by greater adoption and institutional engagement.

Shetty believes that a well-calibrated reduction in transaction-level TDS, along with an evaluation of loss set-off provisions, could significantly enhance onshore liquidity. He argues this would also encourage more economic activities to remain within India’s regulatory framework, ensuring effective oversight and enforcement.

He proposed that providing clear guidelines on accepted activities and compliance expectations would bolster investor trust and contribute to a thriving digital asset ecosystem.

Raj Karkara, CEO of ZebPay, echoed Shetty's concerns, stating that adjusting the 1% TDS could greatly enhance liquidity and encourage more onshore engagement in the crypto markets. He also suggested aligning the 30% tax on virtual asset gains with those applicable to other asset classes and permitting loss set-offs to create a more predictable and favorable investment climate.

Karkara pointed out that improved policy clarity could unleash innovation-driven enterprises and allow India’s Web3 sector to better leverage its talented developers.

“A more accessible and clearly defined regulatory environment would enable India to take a more significant role in the global crypto landscape and align itself with international standards while boosting confidence that the policies are effectively guiding the sector,” he remarked.

Demand for Policy Clarity Grows

These calls for reform come in the wake of India’s recent implementation of more stringent oversight of cryptocurrency platforms. Recently, the Financial Intelligence Unit (FIU) introduced comprehensive Anti-Money Laundering and Know Your Customer (KYC) measures, mandating live identity verification, extensive data collection, including IP addresses and geolocation, and the requirement of Permanent Account Number verification before any trading occurs.

SB Seker, who heads the Asia-Pacific division at Binance, mentioned that India's regulatory approach should transition “past a tax-and-deter model to a more comprehensive licensing and supervisory mechanism.” He advocated for capital gains taxation to center on realized profits instead of transaction-based taxes, proposing that a focus on net revenue-generating corporate taxes would be fairer for retail traders.

“Implementing clear and consistent operational standards for Virtual Digital Asset platforms, which coincide with India’s priorities for AML/KYC and investor protection, will spur responsible capital investment, generate skilled employment, and cultivate domestic capabilities,” Seker stated.

He added that India’s direction in blockchain governance, alongside its digital public infrastructure, serves as a robust foundation to merge innovation with transparency and financial inclusivity.

Tax Officials Highlight Enforcement Challenges Despite Stricter Rules

This push for tax reform follows warnings from Indian tax officials regarding the difficulties in enforcing regulations on crypto transactions. The Income Tax Department has pointed out that offshore exchanges, private wallets, and decentralized finance instruments complicate income tracking and assessments. Officials indicated that the challenges posed by “anonymous, borderless, and near-instant” transactions are significant.

India's current crypto tax regime is considered one of the most rigorous worldwide, despite the sector's legal status and increasing adoption. In the 2024-2025 fiscal year, the Financial Intelligence Unit greenlit 49 crypto exchanges, while Coinbase has marked its return to the market after two years.

Separately, the Reserve Bank of India issued a warning in its latest Financial Stability Report, cautioning that privately issued stablecoins could jeopardize financial stability, asserting that central bank digital currencies should take precedence.

The central bank reported that the global stablecoin market reached nearly $300 billion by the end of 2025, with most tokens being U.S. dollar-pegged and controlled by a limited number of issuers.

Industry analysts note that although Budget 2025 provided significant income tax benefits for individuals, expectations for major tax reforms this year remain cautious due to revenue constraints and global economic uncertainties. Tax experts surveyed by Indian media anticipate that the government will likely focus on maintaining stability rather than pursuing extensive reforms following last year’s significant changes to personal taxation.