Budget 2026: India's crypto sector calls for clarity and tax relief; seeks 1% TDS rationalisation

As the Union Budget approaches, India’s cryptocurrency sector is seeking clear rules for digital assets. It is also seeking for a rationalisation of the 1% TDS on crypto transactions to boost investor confidence and encourage onshore participation.In the Union Budget 2025, the finance minister left the existing tax framework for VDAs unchanged, despite repeated appeals from the industry, which has argued that the current rules discourage investors and traders. India formally recognised cryptocurrencies as Virtual Digital Assets in Budget 2022, introducing a defined tax regime.Under the Income Tax Act, Sections 115BBH and 194S govern the taxation of VDAs such as cryptocurrencies, non-fungible tokens (NFTs) and digital tokens.

Gains from VDAs are taxed at a flat 30 per cent, along with a 1 per cent TDS on transactions, while non-trading income is taxed as per an individual’s income slab, according to ET. Industry leaders said that the upcoming budget is a key moment for course correction. Raj Karkara, Chief Operating Officer at ZebPay, said Budget 2026 comes at a pivotal time for India’s crypto ecosystem. “The Union Budget 2026 comes at a pivotal moment for India’s crypto ecosystem, with the industry hopeful for long-awaited regulatory clarity that can bring greater direction and confidence to the investors and a clear and consistent framework for digital assets would help strengthen trust among investors, institutions, and market participants, while enabling business to operate responsibly within well-defined boundaries,” he said.

Karkara added that from a taxation standpoint, rationalising the current 1 per cent TDS could improve liquidity and encourage stronger onshore participation. He also called for a review of the flat 30 per cent tax on VDA gains, aligned with other asset classes and allowing loss set-offs, to create a more balanced investment environment. “Greater policy clarity could unlock innovation, help India’s Web3 ecosystem scale responsibly, and strengthen the country’s role in the global crypto economy,” he said.Nischal Shetty, founder of WazirX, said the budget offers an opportunity to refine the existing framework. “This budget is a clear opportunity to fine-tune a framework which supports transparency and compliance while fostering innovation,” he said. He added that the lower transaction-level TDS and allowing loss set-offs could revive onshore liquidity and improve compliance.Shetty highlighted that clear rules on reporting would boost investor confidence and support a sustainable digital asset ecosystem aligned with India’s $5 trillion economy goal.Pankaj Balani, CEO and co-founder of Delta Exchange, said India’s strong global crypto adoption should be matched with a clear ‘Make in India’ approach.“India’s leadership in global crypto adoption reflects strong grassroots participation from both retail users and sophisticated market participants, the upcoming Union Budget is an opportunity to match that momentum with a clear ‘Make in India’ approach to the digital assets industry,” he said.Balani stressed the need to support compliant domestic platforms that follow Indian KYC and anti-money laundering norms, capital controls and data protection rules, while acting decisively against unauthorised entities. He said policy should clearly differentiate between compliant Indian platforms and non-compliant offshore operators.Sumit Gupta, co-founder of CoinDCX, said the sector is looking for measured relief, especially as it has been four years since the current tax framework was introduced. “The virtual digital asset sector is naturally looking for measured relief, especially since it has been four years since the current taxation framework was introduced and the decisions taken now can meaningfully accelerate innovation and help India emerge as a global Web3 and VDA leader,” he said.Gupta highlighted the need for clear rules and uniform implementation of TDS across all crypto exchanges, saying this would improve compliance and enhance consumer protection by curbing non-compliant operators.SB Seker, Head of APAC at Binance, said India’s rapid adoption of blockchain and VDAs reflects the scale of its digital economy and growing retail participation. “The forthcoming budget presents an opportunity to strengthen the VDA ecosystem through measured regulatory and tax refinements that protect users, maintain financial stability, and support responsible market development,” he said.