No Change in India’s Crypto Taxation Despite Industry Push for Reforms

India, a nation well-known for its passionate crypto investors, will keep struggling with hefty taxation on digital assets for the next year. To much displeasure of the crypto community, Finance Minister Nirmala Sitharaman decided to keep the present tax policy on cryptocurrencies during the country’s budget release for 2024–2025 on July 23.

India’s Present Crypto Scene

India ranks eleventh in the world for crypto adoption. With no central authority formally supervising their use as a payment method, cryptocurrencies operate in a regulatory gray area in the region. Together with hefty taxes, this lack of clear control has impacted India’s broader crypto adoption.

The current tax structure, introduced in the 2022 central budget, imposes a 30% tax on gains from cryptocurrency transactions. Every transaction additionally carries a 1% tax deducted at the source (TDS). Industry leaders have often criticized this strict approach and advocated for more favorable tax conditions.

Request for Reforms

Indian cryptocurrency investors have been outspoken on social media sites like X (previously Twitter) about their requests for a lower the dubious TDS rate. Many suggest a cut to 0.01% based on studies and data supporting this modification. Leaders in the sector have also advised the Finance Minister to apply progressive income taxes on profits instead of a 30% rate.

They argue that a tiered tax system would promote healthier growth within the industry. Additionally, there have been calls for multi-agency regulation to foster a more supportive environment for crypto adoption in India.

A Strict Attitude

Notwithstanding these requests, the government has displayed a stubborn approach toward crypto regulation and taxes. The government is cautious of embracing a more lenient stance due in part to the growing number of hacks and frauds that have dogged the crypto sector. Furthermore, the general public lacks basic knowledge about cryptocurrencies.

The recent budget is the first since Prime Minister Narendra Modi was elected for a third consecutive term. In November 2021, Modi had called for unified support among democratic nations for crypto regulation, emphasizing the importance of preventing cryptocurrencies from falling into the “wrong hands”. 

Nonetheless, the Indian cryptocurrency market is projected to grow at a compound annual growth rate (CAGR) of 54.11% from 2024 to 2032.