India Is Rethinking Strict Crypto Regulations—But Tax Burden Persists

India is taking another hard look at its crypto stance, re-evaluating its policies in light of major global shifts.

This reconsideration could push back the long-anticipated discussion paper on digital assets, which was originally set for release in September 2024, a senior government official told Reuters on Sunday.

“More than one or two jurisdictions have changed their stance towards cryptocurrency in terms of the usage, their acceptance, [and] where they see the importance of crypto assets,” India’s Economic Affairs Secretary Ajay Seth said in the interview. “In that stride, we are having a look at the discussion paper once again.”

The move comes as the U.S. pivots towards a more crypto-friendly approach under President Donald Trump, who recently signed his crypto-related executive order, introducing a working group to overhaul digital asset regulations.

While Seth did not explicitly reference the U.S., he made it clear that India’s crypto strategy could not be shaped in isolation, saying that digital assets “don’t believe in borders.”

Speaking to Decrypt, Saravanan Pandian, CEO and founder, KoinBX, said “As we see other nations revise their policies, India’s evolving perspective is essential for shaping a balanced regulatory framework that encourages innovation while ensuring financial stability.”

Budget 2025: The Crypto Tax Noose Tightens

While the Indian government appears open to revisiting its policy, there’s no sign of relief for crypto traders in India’s 2025 Union Budget—if anything, the tax hammer is coming down even harder.

The new amendments presented by Finance Minister Nirmala Sitharaman propose bringing undisclosed crypto gains under Section 158B of the Income Tax Act, allowing retrospective audits on transactions dating back 48 months.

If investors have failed to report gains within the last 48 months, they could face a crippling 70% penalty on unpaid taxes, as per the budget announcement.

The 30% tax on crypto gains remains in place, with no exemptions, no deductions, and no differentiation between short-term and long-term holdings.

The controversial 1% Tax Deducted at Source (TDS) on every crypto transaction also stays, further discouraging active trading within the country.

The response from India’s crypto industry has been mixed, with key players voicing their concerns over the lack of relief in the latest budget.

CoinDCX CEO Sumit Gupta applauded the government’s decision to revisit its crypto policy but urged for friendlier regulations and clarity:

“India ranks #1 in grassroots crypto adoption (Chainalysis), and Web3 could contribute $1.1 trillion to India’s GDP by 2032 (NASSCOM),” Gupta wrote on X, formerly Twitter. “To truly lead this digital revolution, regulating the sector, friendlier policies, and releasing a discussion paper on priority is the need of the hour!”

CoinSwitch co-founder Ashish Singhal called the budget a “mixed bag for crypto,” pointing out that while the mandatory reporting of crypto transactions was a step toward legitimacy, the lack of tax relief was a major disappointment.

“No tax relief—trading in India remains expensive,” Singhal tweeted. “More oversight, but no relief—especially on taxes. Now, we wait for the upcoming income tax bill.”

For now, crypto traders and investors will be watching the upcoming simplified Income Tax Act, set to be introduced in Parliament next week, for any last-minute surprises.

Edited by Stacy Elliott.