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India is reconsidering its approach to cryptocurrency as global acceptance and integration of digital assets ramp up, with significant developments across several nations.
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The Indian government is closely monitoring these international shifts, which may influence its regulatory framework moving forward.
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India’s consistent tax structure, imposing a 30% tax on gains from crypto transactions, remains unchanged despite ongoing evaluations.
India reassesses its crypto regulations in light of global developments and maintains its tax structure as digital assets gain traction worldwide.
India’s Review of Crypto Regulation
As reported by Reuters, India’s Economic Affairs Secretary, Ajay Seth, stated that the nation must not adopt a unilateral approach to cryptocurrency regulation. He noted, “Cryptocurrencies don’t believe in borders,” reflecting the need for a more collaborative regulatory stance amid global changes.
With significant countries like the U.S. gearing up to create a “digital asset stockpile” and nations like Japan and Switzerland adapting their financial systems to embrace Bitcoin, India’s response requires careful consideration. This global traction has prompted reconsideration of the anticipated discussion paper on crypto regulations, which has been postponed from its original release date in September 2024.
“More than one or two jurisdictions have changed their stance towards cryptocurrency… In that stride, we are having a look at the discussion paper once again,” Seth shared, signaling India’s intention to adapt to international trends.
However, the lack of adjustments to India’s crypto tax framework was evident in the recent 2025 Union Budget. Currently, Indian lawmakers continue to enforce a taxation model that includes a hefty 30% tax on capital gains from cryptocurrency and a 1% TDS on crypto-related transactions.
Adding further complexity, Finance Minister Nirmala Sitharaman has incorporated “virtual digital assets” under Section 158B of the Income Tax Act, thereby intensifying oversight of cryptocurrencies. This approaching framework categorizes digital assets under undisclosed income, thereby granting authorities robust powers to investigate non-disclosure in tax filings.
The Implications of Taxation on Cryptocurrency Transactions
The inclusion of crypto assets under Section 158B poses significant implications for crypto holders and exchanges in India. This section empowers the Income Tax Department to investigate undisclosed income and enforce stringent penalties. The definitions and stipulations under this act may complicate compliance for crypto exchanges and investors alike.
For further clarity, Section 158B mandates that reporting entities must provide detailed information regarding transactions involving cryptocurrencies, a move that aims to enhance transparency in crypto trading and taxation practices.
Yet, despite the intense regulatory landscape, the Indian government has been scrupulous in its approach, sometimes resulting in friction. For instance, the Reserve Bank of India (RBI) has advocated for a Central Bank Digital Currency (CBDC) in attempt to offset the rise of decentralized cryptocurrencies.
Challenges Faced by Cryptocurrency Exchanges
Indian cryptocurrency exchanges have grappled with regulatory hurdles, as evidenced by the revelation of a $97 million Goods and Services Tax liability attributed to 17 exchanges. Notably, Binance was highlighted as having an outstanding tax bill amounting to $85 million, stirring mounting tension between regulatory authorities and the burgeoning crypto market.
Furthermore, exchange platforms such as Bybit have even pulled out of India, citing compliance difficulties amidst an evolving regulatory environment. These challenges underscore a broader uncertainty in India’s crypto market and the balancing act regulators must undertake to foster innovation while safeguarding the financial ecosystem and tax revenue.
Conclusion
As India embarks on this regulatory journey, stakeholders in the cryptocurrency sector must stay abreast of these developments. The ongoing review and anticipated regulatory adjustments signal a commitment to a more cohesive approach to crypto, mirroring international trends while ensuring compliance and tax integrity. India’s resolute tax structure indicates that while operational landscapes may evolve, the obligation for transparency and taxation in the crypto space remains a critical focus.
