India’s top cryptocurrency players say that a few policy tweaks in the upcoming Budget 2026 could go a long way in ensuring capital does not flow out of the country and instead thrives within the country without sacrificing on regulatory requirements such as KYC norms, and anti-money laundering provisions.
Cryptocurrencies — or Virtual Digital Assets (VDAs), as the government calls them — currently attract a 1% Tax Deducted at Source (TDS) on every transaction, and a 30% tax on any profit made, without the option of setting off losses first.
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That is, the 30% tax applies on any profits made on any crypto transactions, without the option of allowing the user to balance these profits against losses made on other crypto transactions.
These tax measures, crypto industry players say, are restrictive and are encouraging crypto investors to invest in foreign exchanges rather than Indian ones.
“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, Founder of WazirX said.
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“A calibrated reduction in transaction-level TDS and a review of loss set-off provisions could help restore onshore liquidity, improve compliance, and ensure that more economic activity remains within India’s regulated perimeter, without compromising oversight or enforcement,” Mr. Shetty added.
Raj Karkara, chief operating officer at ZebPay, also called for the review of the 30% tax and the 1% TDS, and said that the need was to bring the tax treatment of cryptos in line with other asset classes as a means to ensure more money remains in India.
“From a taxation standpoint, a rationalisation of the current 1% TDS on crypto transactions could meaningfully improve liquidity and encourage stronger onshore participation, while a review of the flat 30% tax on VDA gains, aligned with other asset classes and allowing for loss set-offs, would create a more balanced and predictable investment environment.
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A previous analysis by The Hindu of the government’s TDS data had found that the value of crypto transactions in India had crossed ₹50,000 crore in 2024-25, up from ₹36,270 crore in 2023-24 and ₹22,130 crore in 2022-23.
“India’s rapid adoption of blockchain and virtual digital assets (VDA) reflects both the scale of its digital economy and growing participation by retail users,” SB Seker, Head of APAC for Binance said.
“The forthcoming budget presents an opportunity to strengthen the VDA ecosystem through measured regulatory and tax refinements that protect users, maintain financial stability, and support responsible market development,” he added.
