India’s Crypto Sector Sees Cracks in Tax Wall as Government Warms to Reform

Mumbai traders to Delhi bureaucrats—everyone’s suddenly whispering about slashing that brutal 30% crypto tax. After years of regulatory frostbite, India’s digital asset industry smells blood in the water.

The ask? Simple: Ditch the draconian 1% TDS (because tracking every micro-transaction clearly worked so well for legacy finance). Insiders report closed-door meetings where officials actually nodded instead of scoffing—progress by Delhi standards.

Meanwhile, exchanges are playing both sides—publicly praising ’thoughtful regulation’ while privately calculating how much volume fled to offshore platforms. (Spoiler: It’s most of it.) The RBI still looks like it swallowed a lemon when mentioning crypto, but even central bankers can’t ignore the $500B+ elephant in the economy.

Final thought: When governments start ’reconsidering’ taxes, it usually means they’ve already bled the golden goose dry—or spotted a bigger one next door.

30% tax and TDS rules could be revised to match stock market regulations

Big if true! Indian #crypto traders might finally get some relief pic.twitter.com/8Qc67b8xd8

— Kiran Gadakh ( crypto.kiran ) (@kirangadakh16) February 2, 2025

Currently, crypto transactions in India are subject to a 30% capital gains tax and a 1% tax deducted at source (TDS). The government introduced these taxes in 2022 to help improve traceability and curb illegal use of this asset class.

However, as per a report by Esya Centre published in July 2024, these taxes have resulted in driving over 90% of the Indian crypto traders offshore.

Singhal proposed that a lower transaction tax of 0.1% could ensure traceability without stifling the market.

: Best New Cryptocurrencies to Invest in 2025

Trump’s Pro-Crypto Policy is Influencing the Indian Stance Indirectly

Coinbase, which recently re-entered India, sees Trump’s presidency and pro-crypto stance boosting crypto momentum globally.

Tom Duff Gordon, the company’s vice president of international policy, said that the government of India realises that it cannot realistically achieve an outright ban on crypto.

He explained, “While tax cuts aren’t our immediate priority, we believe a balanced policy could grow the tax base and help repatriate offshore trading activity.”

Platforms like Coinbase and Binance, which recently reopened in India, are eyeing the Indian crypto market, expecting it to grow from $2.5 billion in 2024 to over $15 billion by 2035, based on an analysis by the accounting firm Grant Thornton.

Grant Thornton partner Kush Wadhwa further explained that, “India can’t ignore crypto, but the government’s concerns remain around tax evasion and money laundering. It’s not a ban; they just want better control.”

Despite the perceived advances, the crypto lobby in India remains disappointed. The Bharat Web3 Association condemned the lack of tax relief for digital assets when the February budget was announced, and the CEO of the Bangalore-based cryptocurrency exchange Mudrex, Edu Patel, called the tax regime a deal breaker.

: 9+ Best High-Risk, High-Reward Crypto to Buy in May 2025

Reserve Bank of India Remains Cautious

Historically, the Reserve Bank of India (RBI) has been the strongest opponent of the crypto industry, with a deputy governor likening crypto to Ponzi schemes in 2022. The RBI had even banned banks from servicing crypto firms, which was later reversed by the Supreme Court.

The RBI had suggested in December last year that the crypto industry posed a risk to the financial stability of the country, but since then has softened its stance.

The new RBI governor, Sanjay Mishra, has refrained from directly criticising the crypto industry, stating that the central bank is awaiting the government’s updated policy paper.

Changing public perception remains a hurdle. Suril Desai, who leads the technologies team at Nishith Desai Associates, a law firm that fought the RBI’s attempt to ban crypto, said, “Many Indians still believe crypto is illegal.”

However, there is a strong interest among young Indians to invest in digital assets.

: 10+ Crypto Tokens That Can Hit 1000x in 2025

Key Takeaways

• High taxes have resulted in driving over 90% of the Indian crypto traders offshore
• The Indian crypto market is set to grow from $2.5 billion in 2024 to over $15 billion by 2035
• Many Indins still do not trust crypto, thinking that the asset clas is illegal