India’s Crypto Sector Seeks Tax Overhaul as Budget 2026 Approaches

With the Union Budget 2026 on the horizon, India’s cryptocurrency industry is mounting a coordinated push for meaningful tax reform. Market participants are urging the government to reconsider the existing 30% tax on virtual digital asset gains and reduce the 1% tax deducted at source on transactions. They argue that the current framework has constrained trading activity, weakened domestic exchanges, and driven investors toward offshore platforms. As policymakers balance revenue considerations with innovation goals, the budget is shaping up to be a decisive moment that could redefine India’s stance on digital assets and its broader fintech ambitions.

A Critical Juncture for Crypto Policy
India’s crypto taxation regime, introduced as part of a cautious regulatory stance, was designed to bring transparency and discipline to a fast-growing asset class. However, industry leaders contend that the policy has had unintended consequences. The flat 30% tax on profits, combined with transaction-level deductions, has made crypto trading significantly more expensive than investing in equities or other financial instruments.

As a result, domestic trading volumes have thinned, and several startups have slowed expansion plans, citing reduced liquidity and investor participation.

Calls for a More Balanced Tax Structure
Ahead of Budget 2026, crypto exchanges, investors, and blockchain entrepreneurs are advocating for a reset rather than a rollback. Their proposals include aligning crypto gains taxation with capital market norms and lowering the tax deducted at source to improve cash flow and market efficiency.
Supporters of reform argue that a moderated tax structure would encourage compliance, keep capital within India’s regulatory perimeter, and ultimately broaden the tax base. They maintain that excessive taxation has proven counterproductive, limiting both revenue potential and innovation.

Economic and Innovation Implications
Beyond trading activity, the tax debate carries wider economic implications. Blockchain technology underpins applications ranging from supply-chain finance to digital identity and tokenization. Industry voices warn that a restrictive fiscal approach risks pushing talent and investment to more accommodating jurisdictions.
A clearer distinction between speculative trading and long-term technology development could help policymakers foster innovation while maintaining appropriate safeguards against misuse and volatility.

Investor Sentiment Ahead of the Budget
Investor sentiment remains cautiously hopeful as Budget 2026 draws closer. Any indication of tax relief could act as a catalyst for renewed participation, while policy inertia may prolong the sector’s slowdown. Analysts note that clarity, even more than concessions, is critical for long-term confidence.

The budget’s outcome will signal whether India intends to position itself as a competitive player in the global digital asset economy or continue with a conservative, revenue-first approach.

The Road Ahead
As discussions intensify, the crypto industry is emphasizing collaboration over confrontation. A calibrated tax reset, paired with robust compliance norms, could mark a shift toward sustainable growth. Budget 2026 is widely seen as an opportunity for policymakers to strike a balance between fiscal prudence and technological progress, shaping the future of India’s crypto ecosystem for years to come.