Will heavy tax not be deducted from crypto now?
Budget 2026: As the date of Budget 2026 is approaching, a new hope has arisen in India's crypto market. The eyes of this sector, which has been burdened under heavy tax burden for the last few years, are now fixed on the upcoming announcements of the government. The stringent rules implemented in the Budget 2022 had broken the back of the Indian crypto market, due to which many investors either stayed away from the market or turned to foreign platforms. Now the industry giants have put forward some such demands before the government, which if accepted, will not only bring vibrancy back to the market, but common investors will also be able to heave a sigh of relief.
The first and biggest demand of the crypto industry is regarding reduction in TDS rates. Currently, 1 percent TDS is deducted on every crypto transaction. It may sound small, but this rule is no less than a punishment for day traders, because it locks a large part of their trading capital.
Nischal Shetty, founder of WazirX, says that the industry wants TDS to be reduced to 0.01 percent. He argues that this will also help the government track transactions and the domestic market will also flourish. Mudrex CEO Edul Patel says that due to the fear of higher TDS, Indian investors are shifting to foreign exchanges, due to which neither business is growing in India nor the government is getting the expected revenue.
The second biggest concern is the 30 percent flat tax that is levied on any crypto profits. In the budget of 2022, the government had implemented this strict rule by keeping the earnings from Virtual Digital Assets (VDA) in the category of lottery and betting.
Experts say that this rule discriminates against crypto investors compared to stock market investors. There is tax exemption on long term investment in the stock market, but whether you invest in crypto for 1 day or 5 years, you will have to pay 30 percent tax on the profit. The industry demands that it be rationalized so that long-term investors can be attracted towards this asset class and it is not considered gambling.
The biggest irony of the current rules is that if you suffer a loss in one crypto and profit in another, you cannot compensate that loss with profits. That is, pay full tax on profits and forget the losses.
Industry experts believe that this rule is completely one-sided. The demand is that investors should be allowed to pay tax on 'net revenue' (net profits), as is the case in business or the stock market. According to Nischal Shetty, not allowing set-off of losses reflects an inequitable tax system, which needs to be reformed in Budget 2026.
