Indian Crypto Industry Pushes for Tax Reforms Amid Global Shifts
India’s crypto sector is urging the government to revisit its current tax framework, which many stakeholders argue is overly burdensome and counterproductive to innovation.
Despite a more favorable outlook from policymakers and growing international momentum, especially following Donald Trump’s return to the U.S. presidency and his pro-crypto stance, the domestic industry continues to face significant regulatory and financial headwinds
Since 2022, a 30% capital gains tax and a 1% Tax Deducted at Source (TDS) on all digital asset transactions have made India an inhospitable environment for crypto traders. According to a report by the Esya Centre, these stringent tax measures have pushed nearly 90% of Indian crypto trading to offshore platforms. Industry leaders warn that such policies not only stifle innovation but also drive users toward unregulated markets, eroding India’s potential role in the fast-growing global crypto economy.
“The current tax regime is extremely harsh,” said Ashish Singhal, co-founder of CoinSwitch, one of India’s leading crypto exchanges. He recommends a reduction in transaction tax to 0.1%—one-tenth of the current rate—to promote legitimate trading while maintaining transparency.
Adding to the pressure, new compliance rules now require designated individuals to report crypto transactions to the Financial Intelligence Unit (FIU-IND), increasing regulatory scrutiny without providing any relief from existing tax burdens.
Indian Crypto Industry Signs of a Shift in Government Stance
Industry executives note a significant shift in the government’s engagement with the crypto sector. Where consultations used to occur semiannually, they now happen “monthly, if not weekly,” according to Singhal. This change in tone aligns with the global trend, as Trump’s support for digital assets has influenced international policy conversations, including in India.
Following Trump’s inauguration in January, reports emerged that Economic Affairs Secretary Ajay Seth was working on a revised discussion paper that could form the basis for new crypto regulations. Although Seth has not made a public statement, insiders believe the move signals a broader regulatory rethink.
India’s crypto industry has long operated under a shadow of uncertainty. In 2018, the Reserve Bank of India (RBI) barred banks from servicing crypto firms—a move the Supreme Court overturned in 2020. Since then, the central bank’s rhetoric has softened. While still cautious about financial stability risks, current RBI officials have adopted a more neutral tone, opening the door for possible cooperation.
Major Exchanges Return as Environment Improves
With signs of regulatory thaw, major global exchanges are re-entering the Indian Crypto Industry. Coinbase, the largest U.S.-based crypto exchange, has registered with the FIU-IND and is now operational in India. This marks a return after its 2022 exit, which stemmed from uncertainties around regulation and payment systems.
Binance, the world’s largest crypto exchange, has also re-established a presence in India, signaling a shift toward regulatory compliance and oversight rather than blanket bans.
Tom Duff Gordon, Coinbase’s Head of International Policy, noted that Trump’s comeback has boosted global confidence in the crypto sector. He added that Indian regulators now appear to understand that banning crypto outright is no longer a viable option.
According to Grant Thornton, India’s crypto market is projected to grow from $2.5 billion in 2024 to more than $15 billion by 2035.
“Competition has definitely started heating up,” said Kush Wadhwa, a partner at Grant Thornton India. “India doesn’t have the option to ignore crypto anymore. Their primary concern is not banning it—but regulating it to curb money laundering and tax evasion.”
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