- India has had a very ambiguous and inconsistent relationship with crypto leading to confusion among investors, startups, and regulators.
- Capital gains tax (CGT) is a tax on the profit made from the sale of certain types of assets including Real estate, Stocks and bonds and Cryptocurrency, etc.
- Around the world, governments are increasingly embracing cryptocurrencies.
India’s cryptocurrency leaders, as reported by Financial Times, are adding pressure on the Indian government to restructure taxes introduced in 2022, which drove 90% of domestic trading volume to offshore platforms.
One of industry’s primary demands is the rollback of a 30% capital gains tax and a 1% tax deducted at source (TDS) on every crypto transaction.
India’s inconsistent and ambiguous stance on crypto
Whilst India has not passed any specific legislation banning or regulating crypto in itself, the Reserve Bank of India (RBI) imposed a ban on banks dealing with crypto related businesses in 2018. RBI also introduced a digital form of the Indian rupee Digital Rupee (e₹) with the aim of enhancing efficiency, security, and accessibility to the country’s financial system.
In 2022, the government imposed a 30% tax on crypto gains and 1% TDS on transactions.
These policies, meant to curb illicit activity, have been criticized by industry experts for stifling innovation and liquidity of the digital asset space. In fact, a study by the Esya Centre estimates that this move resulted in over 90% of Indian crypto trading to move abroad.
Industry leaders now argue that a 0.1% TDS would still enable regulatory traceability without undermining growth or investor participation.
However, now policymakers appear increasingly open to digital assets; a shift that can be attributed to global developments, including former U.S. President Donald Trump’s renewed support for cryptocurrencies. Crypto firms in India position this shift as a strategic opportunity.
President Trump launched his own memecoin $TRUMP earlier this year. He held a Gala Dinner for his memecoin holder just last week which came under fire by many. Moreover, Financial Times reports that Truth Social, part of Trump Media & Technology Group (TMTG) aims to raise $3 billion to invest in cryptocurrency assets.
Ashish Singhal, co-founder of CoinSwitch said, “Thanks to Trump, the positive momentum in the global crypto space has influenced sentiment in India as well”.
“Where we used to meet with regulators twice a year, we’re now having discussions nearly every week. There’s a much deeper understanding emerging.”
The Reserve Bank of India meanwhile has gone from hostility to cautious engagement according to Singhal.
“The relationship with the RBI has gone from negative to neutral,” he said.
“I wouldn’t call it positive just yet, but there’s definitely movement.”