Indian Crypto Industry Demands Tax Overhaul in 2026 Budget - Will Regulators Listen?

India's cryptocurrency sector is turning up the pressure. With the 2026 budget cycle underway, industry stakeholders are mounting a coordinated push for the government to slash what they call 'punitive' tax rates that have stifled growth and innovation.

The One-Two Tax Punch

At the heart of the debate are two specific levies introduced years prior: a 1% tax deducted at source (TDS) on every crypto transaction and a hefty 30% tax on all trading profits. Proponents argue these measures were necessary guardrails for a nascent, volatile asset class. The industry's retort? They've created a chilling effect, pushing volume to offshore, unregulated platforms and starving domestic exchanges of liquidity.

Lobbying in Overdrive

Expect a flurry of white papers, closed-door meetings, and public advocacy in the coming weeks. The core argument is economic: reasonable taxation could repatriate trading activity, boost formal sector revenue, and position India as a Web3 hub rather than an outlier. Critics within the finance ministry remain skeptical, viewing crypto as a speculative risk rather than a legitimate asset class—a classic case of old money struggling to price new protocols.

The Regulatory Stalemate

While the industry pleads for relief, global regulatory frameworks continue to evolve. India's stance has been one of cautious containment, not encouragement. The 2026 budget presents a critical juncture: will policymakers adjust course based on market feedback, or double down on financial conservatism? The decision will signal whether India's digital asset future is built onshore or continues to drift into jurisdictional gray areas—because nothing says 'financial innovation' like capital flight to a friendlier tax haven.

India calls for favorable crypto tax in 2026

India agreed to recognize cryptocurrencies as Virtual Digital Assets in its Budget 2022. The country introduced a defined tax regime that year. Under the Income Tax Act, VDAs such as cryptocurrencies, NFTs, and other digital tokens were taxed.

Gains from VDAs were taxed at a flat 30%, alongside a 1% tax deducted at source (TDS) on transactions. Meanwhile, non-trading income is taxed according to an individual’s income slab.

Raj Karkara, the Chief Operating Officer at ZebPay, mentioned that Budget 2026 is coming at an important time for India’s crypto industry. He noted that the industry is looking forward to the clarification that can bring confidence to investors and the market. Karkara also added that it is an opportunity to present a clear and consistent plan for the crypto industry.

Nichal Shetty, founder of WazirX, said that the budget offers the country and the regulators the opportunity to revisit the previous rules. He added that the government needs to look into the TDS and allow loss set-offs, which he claims WOULD be good for liquidity and improve compliance. Shetty also added that clear rules on reporting would boost investor confidence.

Pankaj Balani, CEO and co-founder of Delta Exchange, said the current crypto adoption in the country should follow a clear approach. Balani stressed that regulators need to support compliant domestic platforms that follow rules, while acting against illegal platforms. He said the policy needs to clearly differentiate between complaint platforms in India and non-compliant platforms abroad.

Summit Gupta, co-founder of CoinDCX, said that the sector has been crying out for measured relief, especially during the four years that the current tax framework has been in use. He mentioned that any decision taken by the regulators now should be able to help improve innovation in India and help the country emerge as a global leader in Web3 and VDA. Gupta called for clear rules and the need for the implementation of TDS across all crypto exchanges.

SB Seeker, Head of APAC at Binance, said the adoption of crypto in India shows the power of the digital economy and growing retail participation. He added that Budget 2026 will present regulators with the opportunity to protect users and maintain financial stability through the right regulations.

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