India’s CBDT Considers New Virtual Digital Assets Law Amid Crypto Tax Concerns

India's Central Board of Direct Taxes (CBDT) has initiated consultations with cryptocurrency exchanges and industry stakeholders to evaluate the need for a new legal framework governing Virtual Digital Assets (VDAs). The tax authority is probing whether oversight should fall under SEBI, RBI, MeitY, or FIU-IND, signaling a potential shift from the government's historically rigid stance on crypto regulation.

Current tax policies—a 30% flat rate on gains with no loss offsets and a 1% TDS on trades—have driven liquidity offshore to hubs like Dubai. The CBDT is now reassessing these measures, including whether the TDS rate is excessive and if differential norms should apply to retail traders, institutions, and market makers.

Despite collecting over ₹700 crore in crypto taxes over two years, India lacks real-time income tracking for such transactions. The consultations underscore growing recognition of the need to balance fiscal control with market vitality as trading activity migrates beyond its borders.