India’s financial policy for the 2026-2027 fiscal year is crucial for those in crypto. On February 1, India’s Finance Minister, Nirmala Sitharaman, delivered the Union Budget, presenting government tax measures, fiscal and spending plans, key financial statements, and more.
However, this time as well, crypto taxes are left untouched, meaning no tax reliefs for crypto investors. The 30% tax on crypto investments still prevails in the country alongside the 1% tax deducted at source (TDS) on each transaction.
In other words, if you sell cryptocurrencies worth ₹20,000 (Indian Rupees), the amount the buyer receives is ₹19,800; 1% of the amount—₹200—goes to the government.
The 30% crypto tax and regulatory shift push Indians offshore
The Indian government announced a 30% tax on profits from crypto trading in the Union Budget of 2022-2023 under the Income Tax Act (Section 509) for virtual digital assets (VDAs). From then onwards, the figure remained untouched. Additionally, regulatory authorities started tightening the screws with strict compliance for the industry.
India’s Section 509 tax regime handles penalties imposed on individuals who fail to report specific financial transactions, including crypto. The government has also declared penalties for offenders beginning on April 1, 2026.
If any firms or individuals fail to report the transaction, the government would impose a ₹200-per-day fine for non-filing and a flat ₹50,000 penalty for providing wrong information.
Bitinning, a Bitcoin education platform on X, shared its opinion, stating that the 30% tax is causing crypto investors to move their trading to foreign platforms rather than relying on Indian platforms.
Diving into the statistics of trading activities, the education platform noted that Indians have traded “₹4.87 lakh crore on offshore exchanges.” This is a major surge of 85% year-over-year.
At the moment, 8.5% of crypto trading activities stay on Indian exchanges, and the rest, 91.5%, happen in foreign countries.
According to Bitinning, if the tax figure stays the same for the next 5 years, India’s crypto industry would see ₹39.9 lakh crore trading offshore and ₹39,970 crore TDS at risk.
India’s crypto adoption is remarkable
India is not a last name in crypto adoption. Alongside countries like the US and UK, India too is reputed for its crypto adoption. However, the country is stuck with the current crypto tax policies, according to several industry experts. Talking about India’s crypto ecosystem, crypto educator and host Sujal Jethwani opined that the “innovation behind crypto seems completely ignored.”
As such, crypto educators and other analysts are pressing for the need for clear and progressive crypto policies.
Countries like India see crypto as a risk to financial stability
From the government’s perspective, crypto is considered legal, but at the same time, they view it as a threat to their financial stability. Widespread crypto use could wear away the existence of the Indian rupee.
Moreover, the anonymity or pseudonymous nature of blockchain technology is a major factor why several countries, including India, are concerned. Illicit financial activities like money laundering and tax evasion also add to significant reasons for the government’s lack of interest in crypto.
Former Reserve Bank of India Governor Shaktikanta Das once underscored that cryptocurrencies are risks for both monetary and financial stability. “It also may create a situation where the central bank may lose control of money supply in the economy”, said the Governor, while speaking at the Peterson Institute for International Economics in 2024.
