As India's upcoming federal budget nears finalization, the cryptocurrency sector is intensifying calls for a comprehensive review of the nation’s digital asset tax framework. Since its introduction in 2022, the 30% flat tax on gains and 1% transaction levy have drawn sustained criticism for discouraging participation and innovation.
Tax Burden Undermines Market Participation
Industry leaders argue the current system fails to differentiate between speculative trading and long-term investment. The inability to offset losses against profits, combined with a mandatory 1% TDS on every transaction—even at a loss—creates a uniquely challenging environment.
Despite significant progress in regulatory compliance, including KYC enforcement and reporting standards, tax policy has not evolved to support legitimate market participants.
Budget Offers Rare Opportunity for Change
- Tax revisions can be enacted without new legislation
- India’s regulatory infrastructure now supports nuanced policy design
- Global peers are modernizing crypto taxation, raising competitiveness concerns
Stakeholders hope the February 1 budget will introduce measures like reduced rates for long-term holdings, loss carry-forward provisions, or exemptions for small-value transactions—steps seen as vital to restoring domestic market momentum.