India’s crypto industry is urging the government to rethink digital asset taxes as the February Union Budget approaches.
Industry leaders say the current tax framework is draining onshore liquidity as compliance and enforcement tighten.
Introduced in 2022, the regime imposes a flat 30% tax on crypto gains and a 1% transaction-level tax deducted at source.
Losses from crypto trades cannot be offset against gains, increasing the effective tax burden on traders.
Domestic exchanges argue the rules no longer reflect global market practices or India’s improved oversight.
Executives say sustained tax pressure risks pushing users and liquidity to offshore platforms.
“As India prepares for Budget 2026, there is a clear opportunity to fine-tune a framework which supports transparency and compliance while fostering innovation,”
Nischal Shetty said.
Shetty said reducing transaction-level taxes and reviewing loss offset rules could restore onshore activity.
ZebPay chief operating officer Raj Karkara called the upcoming budget a “pivotal moment” for the sector.
“A rationalisation of the current 1% TDS on crypto transactions could meaningfully improve liquidity,”
Raj Karkara said.
Binance APAC head SB Seker said the budget offers a chance to move away from a “tax-and-deter” approach.
“Clear, consistent operating standards for VDA platforms will encourage responsible capital investment,”
SB Seker said.
The reform push comes as India’s Financial Intelligence Unit introduced stricter KYC rules for crypto platforms.
Tax officials have warned lawmakers that offshore exchanges and DeFi tools complicate income tracking.