India’s crypto industry is renewing calls for tax reform ahead of the country’s February Union Budget, arguing that the current framework is discouraging onshore activity as regulatory compliance requirements continue to tighten.

India’s current crypto tax framework, introduced in 2022, levies a flat 30% tax on crypto gains and applies a 1% tax deducted at source (TDS) on most transactions, whether they are profitable or not. At the moment, losses from trades can’t be used to offset gains. 

Executives from major domestic exchanges say the existing tax regime, particularly transaction-level taxes and restrictions on loss setoffs, no longer reflects how the global digital asset market has evolved, nor India’s own progress in strengthening oversight and enforcement. 

The renewed push comes as policymakers finalize fiscal priorities for the next financial year. The Union Budget of India, expected to be presented on Feb. 1, is widely seen as one of the few avenues through which meaningful tax recalibration can occur without new legislation. 

Exchanges argue compliance is in place, tax friction remains

Exchanges argued that sustained pressure on compliant platforms risks pushing liquidity, users and innovation offshore, effectively undermining the oversight goals regulators are attempting to achieve.

In a statement sent to Cointelegraph, Nischal Shetty, founder of domestic exchange WazirX, said that India has an opportunity to refine its crypto framework in a way that balances enforcement with innovation. 

“As India prepares for Budget 2026, there is a clear opportunity to fine-tune a framework which supports transparency and compliance while fostering innovation,” Shetty said.

Shetty argued that the current regime should be reassessed “in line with how Web3 has matured over the last couple of years globally,” citing increased institutional adoption and evolving regulations worldwide.