As India’s Union Budget 2026 approaches, the cryptocurrency industry is increasingly hopeful that the government will introduce clearer regulatory frameworks and fairer tax policies for digital assets. According to the Economic Times, the focus this time is expected to be on regulatory clarity rather than imposing new or harsher taxes.
Current Crypto Tax Regime: 30% Flat Rate + 1% TDSSince Budget 2022 officially recognized crypto as a Virtual Digital Asset (VDA), India has enforced a strict taxation system: profits are taxed at a flat 30%; a 1% Tax Deducted at Source (TDS) is applied to every trade; losses cannot be offset against profits; and small traders and large investors face the same rate. In Budget 2025, despite repeated industry pleas, the government kept these rules unchanged. This one-size-fits-all policy has driven many investors and traders to overseas platforms, significantly reducing domestic trading volumes.
Industry Leaders Call for a “Reset”
Sumit Gupta, CEO of CoinDCX, one of India’s largest crypto exchanges, called Budget 2026 an opportunity for India to “reset” its crypto policy. Gupta proposed three key demands: reduce TDS from 1% to 0.01% to bring trading activity back to domestic exchanges; replace the flat 30% rate with income slab-based taxation; and allow loss set-off as with other asset classes. Supporters argue these steps would enhance transparency and encourage users to stay on Indian platforms instead of moving abroad. Lower TDS could also reduce grey market transactions and improve overall tax compliance.
Exchange Data Highlights Market Scale
Data from CoinDCX reveals the true size of India’s crypto market: the exchange currently has over 21 million users and has paid more than ₹13 crore (₹130 million) in TDS to the government. It also holds reserves exceeding $500 million and maintains an investor protection fund. These figures indicate that India’s domestic crypto activity remains vibrant, albeit suppressed by the current tax regime. India is also one of the leading nations in digital asset adoption. In 2025, the number of people contributing to crypto SIPs increased by nearly 60%. Industry observers believe that if the upcoming crypto tax treatment becomes more balanced, the grey market will shrink and more capital will flow into regulated channels.
Government’s Cautious Approach and Tightened Oversight
However, the government remains cautious. In January 2026, the Income Tax Department and the Reserve Bank of India expressed concerns in Parliament about the borderless nature of digital assets, warning that crypto could bypass capital controls and threaten financial stability. Tax authorities have stepped up monitoring by using data from FIU-registered exchanges and issuing notices to users with mismatched tax details. This indicates that while reform is possible, strict oversight is likely to persist. The government may pair tax cuts with requirements for more detailed transaction reporting to ensure anti-money laundering and counter-terrorism financing compliance.
Strategic Significance of Budget 2026
The decision on crypto taxation in India Budget 2026 could shape the country’s digital asset future. Fair taxes, clear rules, and investor protection could help India transition from strict control to structured growth. If the industry’s demands are adopted, India could become a global benchmark for crypto compliance; if the status quo remains, it may continue to face talent and capital flight. The community is now waiting to see whether the budget brings meaningful change or maintains the status quo.