Whalesbook
Crypto Industry Pushes for Tax Overhaul Ahead of Budget 2026
India's cryptocurrency and virtual digital asset (VDA) sector is preparing a wishlist for the upcoming Union Budget 2026, advocating for substantial tax reforms to revitalize domestic trading and investor confidence. Industry players are urging the government to revisit the tax structure implemented in 2022, which they argue has significantly hampered market activity.
Reducing TDS Burden
The primary demand focuses on drastically reducing the 1 percent Tax Deducted at Source (TDS) currently levied on every crypto transaction. The industry proposes slashing this to a nominal 0.01 percent. This move, according to founders like Nischal Shetty of WazirX, is essential to balance transaction tracking with fostering domestic market growth, preventing capital lock-up for traders.
Reviewing Capital Gains Tax and Loss Set-offs
Beyond TDS, calls are mounting to review the 30 percent flat capital gains tax on VDAs. Experts argue this steep rate, applied irrespective of holding periods, creates a stark disparity compared to other asset classes and erodes net returns, particularly for long-term investors. Edul Patel, CEO of Mudrex, emphasizes that allowing investors to set off losses from one crypto transaction against gains from another is critical for a fair and sustainable market.
Seeking Regulatory Clarity
While the government has maintained that cryptocurrencies are not regulated assets, the industry seeks definitive guidelines on their classification and treatment. Raj Karkara, COO of ZebPay, notes that regulatory clarity would significantly bolster confidence among investors and institutions, enabling businesses to innovate responsibly and deepen onshore participation in the digital asset ecosystem.