India’s 2026 Budget Sparks Crypto Clash: TDS Rules & Regulatory Uncertainty Fuel Industry Backlash
New Delhi's latest fiscal blueprint has digital asset traders and exchanges bracing for impact. The proposed tax deducted at source (TDS) framework for cryptocurrency transactions is drawing fierce criticism from a sector already navigating murky regulatory waters.
The Compliance Crunch
Industry leaders warn the one-size-fits-all TDS mandate could cripple liquidity on domestic platforms. The mechanism, designed for traditional assets, fails to account for crypto's 24/7 global market dynamics—forcing local traders into a competitive disadvantage overnight.
Regulatory Whiplash
While the budget acknowledges crypto's economic footprint, it offers zero clarity on comprehensive regulation. This creates a classic bureaucratic paradox: demanding tax compliance for an asset class it still refuses to fully legitimize. It's the financial equivalent of building a toll booth on a road you haven't finished paving.
The debate now centers on whether these measures protect investors or simply push activity toward less transparent offshore venues. As one exchange CEO quipped, 'They're taxing the visible tip of the iceberg while pretending the rest doesn't exist.' The coming parliamentary sessions will determine if India's crypto policy evolves beyond mere revenue collection—or remains a masterclass in taxing innovation while stifling its growth.
Source: X (formerly Twitter)
How Crypto Is Taxed in India Right Now?
Crypto was officially recognised as a Virtual Digital Asset (VDA) in Budget 2022. Since then, the country has followed a strict taxation system for users.
Any profit is taxed at a flat 30%
A 1% TDS is deducted on every trade
Losses cannot be adjusted against profits
Even small traders and big investors pay the same rate
In Budget 2025, the government kept these rules unchanged, despite repeated requests from the industry.
Industry Wants Fairer Rules
Industry leaders have openly shared their concerns. CoinDCX CEO Sumit Gupta called Budget 2026 a chance for India to “reset” its approach.
Lower the TDS from 1% to 0.01% so trading activity can return to Indian exchanges
Replace the flat 30% rate with income slab-based taxation
Allow loss set-off, just like other asset classes
Supporters say these steps WOULD make trading more transparent and encourage people to stay on Indian platforms instead of moving abroad.
What Exchange Data Tells ?
Data provided by CoinDCX reveals the actual size of the crypto market in India. The exchange currently has over 21 million users and has already paid more than ₹13 crore in TDS to the government. It also holds reserves of more than $500 million and has an investor protection fund.
The country is also one of the leading countries in digital assets adoption. In 2025, the number of people contributing to digital currency SIPs increased by almost 60%. It is also believed that if the upcoming crypto tax treatment becomes more balanced, the grey market will decrease.
Government is Still Moving with Caution
The government is still moving with caution. In January 2026, the Income Tax Department and the Reserve Bank of India expressed their concerns in Parliament about the borderless nature of this asset class.
Taxation authorities have increased monitoring by using data from FIU-registered exchanges and sending notices to users where tax details don’t match. This shows that while reform is possible, strict oversight is likely to continue.
Why Is Budget 2026 So Important?
The decision on India Budget 2026 could shape the future of crypto in the country. Fair taxes, clear rules, and investor protection could help the nation MOVE from strict control to structured growth in digital assets. For now, the community is waiting to see whether it brings meaningful change or keeps things exactly the same.
