India’s crypto industry is stepping up pressure on policymakers, calling for friendlier tax treatment and regulatory clarity in the upcoming Union Budget 2026, as firms warn that the current framework is stifling growth, liquidity, and global competitiveness.
Industry Seeks Reset After Years of Friction
Leading crypto companies and executives argue that India’s existing tax regime has discouraged participation and driven capital offshore. Despite repeated appeals, the Union Budget 2025 left the rules for Virtual Digital Assets (VDAs) unchanged, deepening frustration across the sector.
Industry leaders now want clear digital asset rules, a rethink of the 1% tax deducted at source (TDS) on transactions, and a more balanced approach that restores investor confidence and attracts foreign participation. Many warn that without reform, India risks falling behind as other jurisdictions modernize their crypto policies.
How India’s Crypto Tax System Works
India formally recognized cryptocurrencies as Virtual Digital Assets in Budget 2022, introducing one of the world’s strictest tax regimes. Under the Income Tax Act, gains from VDAs-including cryptocurrencies, NFTs, and digital tokens-are taxed at a flat 30%, regardless of income level.
On top of that, a 1% TDS is applied to every crypto transaction, while losses cannot be offset against gains. Non-trading income is taxed according to an individual’s income slab. Critics say this structure kills trading volumes, drains liquidity, and discourages compliant behavior.
Exchanges Call for Liquidity and Clarity
Raj Karkara, chief operating officer at ZebPay, said Budget 2026 arrives at a pivotal moment. He stressed that the industry is looking for clarification that can rebuild trust, adding that the budget offers a chance to present a clear and consistent long-term plan for crypto in India.
Similarly, Nischal Shetty, founder of WazirX, urged regulators to revisit the 1% TDS and allow loss set-offs. He argued that these changes would boost liquidity, improve compliance, and make reporting more transparent for both users and platforms.
Domestic Platforms Want a Level Playing Field
Pankaj Balani, CEO and co-founder of Delta Exchange, emphasized the need for a clear policy distinction between compliant domestic platforms and illegal offshore exchanges. He said regulators should support Indian platforms that follow the rules, while taking decisive action against non-compliant operators serving Indian users from abroad.
This sentiment reflects growing concern that overregulation at home is pushing activity offshore, undermining India’s ability to supervise and benefit from the sector.
Web3 Ambitions Hang in the Balance
Sumit Gupta, co-founder of CoinDCX, said the industry has been “crying out for measured relief” after four years under the current tax regime. He argued that decisions made now could revive innovation and help India emerge as a global leader in Web3 and VDAs. Gupta also called for uniform implementation of TDS across all exchanges to prevent regulatory arbitrage.
From a global perspective, SB Seeker, head of APAC at Binance, said India’s crypto adoption highlights the strength of its digital economy and retail participation. He added that Budget 2026 offers regulators a chance to protect users while preserving financial stability through balanced rules.
Budget 2026 as a Make-or-Break Moment
With India home to one of the world’s largest retail investor bases, the outcome of Budget 2026 could determine whether the country becomes a global crypto hub-or watches innovation migrate elsewhere. For now, the industry is unified in one message:
