As the Union Budget 2025 approaches, the Indian cryptocurrency industry is urging the government to reconsider existing tax policies to foster growth and compliance. Industry experts have called for a reduction in the 1% Tax Deducted at Source (TDS) on Virtual Digital Asset (VDA) transactions to 0.01%, arguing that the current rate restricts liquidity and complicates compliance efforts. Additionally, the market seeks clarity on loss offset provisions, which could provide relief to investors navigating the evolving regulatory landscape.
Read in detail:
Kavitha Kanaparthi, Founder & CEO, Soulverse
As per the ITAT’s decision, gains from cryptocurrency sales are taxed as capital gains, with exemptions applicable. From April 1, 2022, a 30% tax applies to all crypto profits, regardless of the holding period, with no deductions or exemptions. A 1% TDS is also imposed on transfers, which creates a barrier to innovation using blockchain solutions for the financial sector, which is one of the most vulnerable sectors to data theft and in need of secure solutions. There’s also a need for clarity on how losses from virtual digital assets (VDAs) are treated. Simplifying tax rules to offset losses from one crypto against another could benefit investors, governments, and users and, promote innovation.
A robust regulatory framework would not only promote innovation but also address key issues like anti-money laundering (AML) and counter-terrorist financing (CTF). Blockchain’s potential is waiting to be unlocked. With AI integration there is great potential for attracting investment, creating jobs, and positioning India as a leader in the global digital assets space, including the development of and support for companies that create secure digital wallets. Additionally, integrating blockchain technology across key industries could accelerate industry growth nationwide, making India a leader in future-proof tech-based solutions.
Ashish Singhal, Co-founder, CoinSwitch
The Virtual Digital Asset (VDA) industry in India has immense potential to contribute to the nation’s digital economy. To fully harness this opportunity, the upcoming Budget provides a crucial moment to refine taxation policies, fostering both growth and compliance within the sector.
We propose a reduction in the Tax Deducted at Source (TDS) on VDA transactions from the current 1% to 0.01%. This adjustment would significantly ease compliance challenges and promote market transparency while ensuring the tracking and tracing of transactions and boosting tax revenues. Additionally, we recommend raising the TDS applicability threshold from INR 10,000/50,000 to INR 5,00,000. This would protect small investors and traders from undue tax burdens, ensuring fair treatment across the board.
To further support the industry’s growth, we advocate for aligning the taxation of VDA income with other asset classes and removing the current discriminatory treatment. Allowing taxpayers to set off or carry forward losses, as permitted under capital gains provisions, would establish parity and create an environment for innovation.
We are hopeful that the government will recognize the VDA industry’s potential and take steps toward balanced and progressive policies that enable its growth.
Edul Patel, CEO & Co-founder, Mudrex
India has consistently ranked among the top nations in crypto adoption, showing the growing interest of Indians in the digital asset space. While the 2022 Union Budget provided some clarity to the ecosystem, it also brought challenges, especially with higher taxation. The 1% TDS on crypto transactions led many investors and traders to turn towards foreign exchanges, making it harder for the government to track activity. Additionally, the inability to offset losses against gains has further discouraged investor participation.
As this year’s budget nears, we look forward to a more balanced and progressive approach that would encourage innovation and support sustainable growth for the sector. A reduction of TDS down to 0.01% and the allowance for offsetting losses could significantly benefit investors and drive positive momentum in the industry.
