As expectations build around India’s Union Budget 2026, the crypto industry is once again watching closely to see whether long standing tax concerns will finally be addressed. Since the introduction of a strict taxation framework for virtual digital assets, investors and exchanges have repeatedly argued that the current rules are discouraging participation and pushing activity outside the country. The upcoming budget is therefore being seen as a crucial moment for potential recalibration.
At present, gains from crypto assets are taxed at a flat rate, with additional compliance measures such as transaction based deductions and restrictions on setting off losses. These provisions were introduced to improve transparency and curb misuse, but industry participants believe they have also reduced trading volumes on domestic platforms. Many investors feel that the framework treats crypto differently from other asset classes, making participation less attractive for retail traders and startups alike.
In the run up to the budget, industry bodies have urged policymakers to consider rationalising the tax structure. Suggestions include lowering transaction related deductions, allowing losses to be adjusted against gains, and providing clearer definitions around different types of digital assets. According to market participants, such changes would not only improve compliance but also bring more trading activity back to Indian platforms, supporting innovation and employment in the sector.
However, government authorities remain cautious. Officials associated with Central Board of Direct Taxes have consistently highlighted concerns around financial stability, tax evasion, and the use of crypto assets for illicit activities. This cautious approach suggests that revenue protection and regulatory oversight may continue to take priority over broad tax relief. Any changes, if announced, are likely to be incremental rather than transformative.
At the same time, discussions are ongoing between the finance ministry and regulators such as Securities and Exchange Board of India and Reserve Bank of India to create a clearer supervisory framework for crypto exchanges. While this may strengthen investor protection and improve reporting standards, it does not automatically imply a softer tax regime in the near term.
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