As the Union Budget 2026 draws closer, India’s cryptocurrency investors and digital asset companies are closely watching New Delhi for possible tax and regulatory relief. Finance Minister Nirmala Sitharaman is set to present the budget in the coming days, and expectations are high that the government may address long-standing concerns surrounding the 30 percent tax on crypto gains and the 1 percent Tax Deducted at Source (TDS) on every transaction.
Heavy Tax Burden Under Spotlight
Currently, India imposes one of the world’s toughest tax regimes on cryptocurrencies. Since 2022, profits from digital assets have attracted a flat 30 percent tax, irrespective of the investor’s income slab. In addition, a 1 percent TDS on each transaction has significantly impacted market liquidity. As a result, trading volumes on domestic exchanges have dropped, making frequent trading expensive and less attractive for retail investors.
Industry experts argue that this structure discourages participation and innovation. More importantly, they believe the high TDS shows its impact almost immediately by locking up capital and reducing overall trading activity.
Investors Moving to Offshore Platforms
Because of these strict rules, a large number of Indian crypto investors have shifted to offshore and foreign exchanges. Consequently, billions of dollars in trading volume have moved out of the country over the past two years. This migration has raised concerns about capital flight, reduced tax compliance, and weaker oversight of Indian users operating on overseas platforms.
Therefore, ahead of Budget 2026, the crypto industry has put forward clear demands. Exchanges and Web3 companies want the government to cut the 1 percent TDS to 0.01 percent. At the same time, they seek permission to offset losses against gains and align crypto taxation with regular income tax slabs instead of the flat 30 percent rate.
Industry Push for a Balanced Approach
Leading platforms such as CoinDCX and ZebPay have repeatedly stated that rational tax reforms could revive domestic trading. According to them, lower taxes would improve compliance, boost liquidity, and help Indian exchanges regain competitiveness. In turn, this could support innovation and job creation within the country’s growing digital asset ecosystem.
Government and RBI Remain Cautious
However, the government and the Reserve Bank of India continue to adopt a cautious stance. Authorities have consistently flagged concerns over price volatility, money laundering risks, and the challenges of monitoring transactions routed through offshore platforms. At the same time, the Centre has shown strong interest in promoting the digital rupee, or Central Bank Digital Currency (CBDC), as a safer alternative within a regulated framework.
All Eyes on Budget 2026
In the backdrop of rising global adoption of digital assets, Budget 2026 could prove crucial for India’s crypto landscape. If the government announces meaningful tax relief and regulatory clarity, it may restore investor confidence and bring trading activity back onshore. Until then, the crypto community waits anxiously, hoping for a policy reset that balances innovation with regulation.
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