India budget leaves harsh crypto taxes untouched

TLDR

India's latest Union Budget keeps its strict crypto tax regime unchanged and focuses on tougher enforcement instead of relief.

1. Budget 2026 leaves the 30% tax on crypto gains and 1% TDS in place, while adding new penalties for non-reporting of transactions.
2. Data from Indian traders show many investors with net yearly losses still owe tax because losses cannot offset gains, pushing activity toward offshore platforms.
3. The next big shift would likely require a separate crypto law or a future budget that cuts rates, allows loss setoffs, or replaces the 1% TDS with a lower transaction tax.

Deep Dive

1. Tax Rules Unchanged

India continues to tax most crypto gains at a flat 30%, with a 1% tax deducted at source (TDS) on each trade in virtual digital assets (VDAs).

The Union Budget 2026 did not mention crypto in the main speech, and supporting documents confirm the existing framework remains in place, despite sustained industry lobbying for change. A separate budget note instead introduces new penalties from 1 April 2026: failing to file required VDA transaction statements can attract a ?200 per day penalty, and providing incorrect or uncorrected information can trigger a ?50,000 fine, aimed at tightening compliance for crypto tax reporting.

Industry voices like Unocoin CEO Sathvik Vishwanath describe this as a missed chance to rationalise what they call a restrictive regime that is misaligned with other financial markets, arguing for loss setoffs and lower friction on each trade. That view is detailed in a CoinsKid Community analysis of the budgets crypto section, which highlights regulators focus on enforcement rather than relief for traders and exchanges.

2. Impact On Indian Users

Under the current rules, you pay tax on individual profitable trades at 30%, but you cannot offset those gains with losses from other coins or other years.

A KoinX study of nearly 700,000 Indian users for FY 202425 found that taxable capital gains (?3,722 crore) were significantly higher than net economic profit because losses are ignored in the tax calculation. Some investors with about ?1,178 crore in net losses still owed tax on roughly ?180 crore of isolated gains, and over 30% of TDS deductions exceeded final tax dues, leading to large refund claims. This structure, combined with the 1% TDS on every trade, has already reduced volumes on compliant Indian exchanges and pushed many active traders to offshore venues or informal channels.

3. What To Watch Next

In the near term, the main changes are stricter penalties and continued uncertainty, not friendlier tax treatment.

Indian industry groups are now likely to push harder for three specific reforms: allowing loss setoffs (at least within VDAs), cutting the 30% rate closer to equity capital gains, and replacing the 1% TDS with a lower transaction-based or exchange-level levy. Policymakers could address these via a dedicated crypto/VDA law or a future budget cycle, but there is no clear timetable yet.

For users, the key things to monitor are: any finance ministry or tax-board consultation on VDAs, court cases that challenge the current rules, and whether domestic exchanges report further volume leakage to offshore platforms, which would strengthen the argument that the regime is hurting onshore liquidity rather than protecting investors.

Conclusion

Indias choice to leave harsh crypto taxes untouched, while tightening enforcement, signals continuity rather than support for domestic Web3 growth. The combination of 30% tax, 1% TDS, and no loss setoff continues to weigh on local trading volumes and encourages capital flight to offshore platforms. Until policymakers seriously consider loss relief and a lower-friction alternative to TDS, India will remain a challenging market for active crypto traders, with meaningful change likely tied to a future budget or a standalone crypto law.