Indian Lawmakers Challenge Crypto Tax Policy as Trading Activity Flees Offshore

Indian MP Raghav Chadha has sharply criticized the government's contradictory stance on cryptocurrency taxation. While authorities impose a 30% capital gains tax and 1% TDS on crypto transactions, they simultaneously refuse to grant legal recognition or establish investor protections. This regulatory limbo has triggered an exodus of trading volume and startups.

Chadha revealed that 73% of India's crypto trading activity—worth approximately ₹4.8 lakh crore—has migrated to offshore platforms. About 180 domestic crypto startups have relocated abroad, while 120 million Indian traders now access foreign exchanges. The lawmaker condemned this as a policy failure that sacrifices tax revenue and technological leadership.

The parliamentarian demanded immediate legal recognition for virtual digital assets (VDAs), proposing a regulatory sandbox with robust AML safeguards. "We're taxing what we won't regulate," Chadha remarked in the Rajya Sabha, noting the absurdity of collecting taxes on transactions the government refuses to legitimize.