India’s Crypto Sector Demands Tax Relief to Spark Revival—Will the Government Bite?

Indian crypto firms are mounting pressure on regulators to slash punishing tax rates strangling the industry. With trading volumes evaporating since 2022’s crippling 1% TDS and 30% capital gains hits, exchanges are pushing for a lifeline.

Sources say lobbyists want the TDS slashed to 0.01% and losses allowed to offset gains—because nothing says ’pro-growth policy’ like letting speculators write off their bad bets. The question remains: will Delhi budge before the entire market moves offshore?

Meanwhile, traditional finance giants quietly pile into tokenization projects—proving once again that disruption is only revolutionary until it’s profitable.

India pushes for 0.1% TDS

The 1% TDS was introduced to enhance the traceability of the transactions. However, Singhal argued that a 0.1% TDS could still achieve the objective, instead of the harmful effect of driving trading and investors offshore. 

“A 0.1 per cent transaction tax WOULD achieve the same traceability objectives without discouraging trading. Now regulators are more closely talking to us, understanding what the space is.”

The restrictive tax regime was adopted in 2022 and triggered a mass exodus, including global players like Coinbase, Binance, and Bybit. In fact, overall crypto trading volumes tanked by nearly 90% as the regulator intensified its clampdown, including those linked to anti-money laundering issues.  

The agency, India’s Financial Intelligence Unit (FIU), slapped most exchanges with penalties. However, Binance, KuCoin, and Coinbase have secured licenses to relaunch operations in 2025 after settling the fines. 

Meanwhile, the ongoing crypto shift could help capitalize on India’s massive crypto market, which is expected to grow to $15 billion by 2035, according to Grant Thornton. That would mean a 7x growth from $2.5 billion in 2024. 

Despite these positive developments, however, the Reserve Bank of India has been a strong critic of the sector, citing the potential negative impact of crypto on financial stability.