India’s cryptocurrency landscape is on the cusp of significant change, as discussions surrounding regulatory frameworks heat up. With growing engagement from the government and evolving market dynamics, local crypto players are actively re-evaluating the legal and tax frameworks governing digital assets. The Central Board of Direct Taxes (CBDT) has recently reached out to industry stakeholders, sparking conversations about the necessity for a new digital assets law and the implications of existing tax structures.
The CBDT’s inquiry reflects a crucial moment for India’s crypto sector, as it grapples with a 30% flat tax on capital gains and a 1% tax-deducted-at-source (TDS) on every transaction. Many players are questioning whether these rates are too stringent and are stifling market growth. As reported by The Economic Times, the tax authority has asked crypto platforms to respond by mid-August, with a specific focus on how these taxes have impacted trading volumes and liquidity.
This consultation also delves into the pressing need for legal clarity surrounding derivatives and cross-border transactions. With platforms like CoinDCX now offering derivative products and leverage as high as 100x on certain pairs, the stakes are higher than ever. As these platforms expand, the demand for a coherent legal framework becomes increasingly urgent.
So, what does this mean for the future of cryptocurrency in India? The CBDT’s approach is viewed optimistically by the crypto community, which has been vocally advocating for tax reform. There’s a growing consensus that adjusting the current tax measures could help usher in a more balanced and innovative environment for digital assets. Many crypto advocates call for a rollback on the overwhelming 30% capital gains tax and the 1% TDS that hampers operational flexibility.
🇮🇳 India’s crypto industry is intensifying a push for tax reform as government engagement grows following Trump’s renewed support for digital assets. #Web3 #CryptoIndia https://t.co/32JQqAJWu0— Cryptonews.com (@cryptonews) May 27, 2025
Furthermore, shifts in global crypto policy and positive movements in other jurisdictions, particularly concerning cryptocurrency exchange-traded funds (ETFs) in the United States, are putting pressure on India to reconsider its traditionally skeptical stance. Purushottam Anand, an advocate and founder of Crypto Legal, expressed a growing optimism that India could soon adopt comprehensive regulations for digital assets. He pointed to the nation’s G20 Synthesis Paper and the Parliamentary Standing Committee on Finance’s recent initiatives to examine the crypto space more closely as key indicators of change.
Yet, the Reserve Bank of India (RBI) remains a significant hurdle. Its sustained antagonism towards cryptocurrencies complicates the landscape. Anand noted that despite China’s stringent nationwide crypto ban, a global pivot towards regulatory frameworks is becoming evident. How India incorporates these pressures into its approach could determine whether it thrives as a leader in the digital asset arena or lags behind its global counterparts.
The enthusiasm isn’t solely one-sided. Indian leaders in the crypto industry are showcasing a strategic shift in their communication with regulators. Sumit Gupta, co-founder and CEO of CoinDCX, highlighted India’s meaningful contribution to international discussions on cryptocurrency during its G20 presidency. “Countries are rapidly embracing cryptocurrency as they craft financial systems that foster innovation while ensuring consumer safety,” Gupta explained. “Now is the time for India to establish a clear, long-term roadmap for this burgeoning sector.”
Echoing this sentiment, Ashish Singhal, co-founder of CoinSwitch, noted that the interactions between local crypto enterprises and regulators have noticeably improved. Speaking with Financial Times, Singhal observed a shift in the RBI’s stance toward crypto, describing the relationship as having transitioned from negative to neutral. Although he stopped short of labeling it positive, this change signifies a budding willingness to engage.
As this pivotal moment unfolds, all eyes will be on how India navigates the complexities of digital asset regulation. Will the country take proactive steps toward crafting a supportive framework that promotes innovation while safeguarding investors? Only time will tell, but the conversations happening today will undoubtedly shape the future of cryptocurrency in India. For more updates on cryptocurrency legislation and tax developments, stay tuned and engaged with our coverage.