Short Description
India’s crypto sector is urging tax reforms ahead of the February Union Budget, emphasizing the need for a tax system that encourages onshore activity and innovation.
Read Time
Approximately 3 minutes and 30 seconds.
Main Article
As India prepares for its Union Budget on February 1, calls for reform in the cryptocurrency tax framework are intensifying. The current regime, established in 2022, imposes a flat 30% tax on crypto gains alongside a 1% tax deducted at source (TDS) for transactions. This structure has raised concerns among industry leaders who argue it hampers compliance and pushes trading activity offshore, countering the regulatory objectives aimed at enhancing oversight.
Crypto executives, such as Nischal Shetty of WazirX and Raj Karkara of ZebPay, have highlighted that the existing tax rules do not align with global digital asset trends or the evolving landscape of Indian regulations. Shetty has advocated for a revised approach that promotes both transparency and compliance while also nurturing innovation. He suggests recalibrating the TDS and allowing for loss setoffs as practical measures to improve liquidity and encourage onshore participation.
Moreover, SB Seker from Binance emphasized that the forthcoming budget presents an opportunity to adapt India’s crypto tax structure to better suit growing retail engagement. A fairer model focusing on realized capital gains rather than transaction-level taxes could significantly encourage responsible investment and job creation within the sector.
The backdrop to these appeals is a tightening regulatory environment, as India’s Financial Intelligence Unit has introduced stringent Know Your Customer (KYC) requirements. This push for robust compliance is intended to safeguard against potential risks linked with decentralized finance and private wallets, which complicate tracking taxable income. Enhanced regulations are essential; however, they must be balanced with supportive policies that do not stifle domestic innovation.
Short Summary
India’s crypto industry is urging reforms in the taxation framework as the February Union Budget approaches. Industry leaders advocate for adjustments that would support compliance and innovation, emphasizing the need for a system that reflects current market realities and encourages onshore activity. By addressing transaction-level taxes and loss setoffs, the government can foster a healthier crypto environment.
