India’s cryptocurrency sector is lobbying for major tax reforms as policymakers in New Delhi show signs of warming up to the digital asset space, once treated as a regulatory outcast.
The shift in sentiment comes at a crucial time, with India negotiating a broader trade deal with the United States and former U.S. President Donald Trump returning to the White House with a pro-crypto stance.
Executives at leading Indian crypto exchanges say the Modi government is now more receptive and open to regular dialogue. Ashish Singhal, co-founder of CoinSwitch — one of India’s largest exchanges with over 20 million users — told the Financial Times that policy meetings are now held “monthly, if not weekly,” compared to once every six months earlier.
The crypto industry’s top demand right now is a cut in the current tax structure. Since 2022, India has imposed a 30% tax on capital gains from crypto and a 1% TDS on every transaction — rules brought in to tackle illegal activity and improve traceability.
However, these policies have pushed more than 90% of Indian crypto trading offshore, according to a report by the Esya Centre, a New Delhi-based think tank.
“Thanks to Trump, the positive momentum that has happened in crypto has impacted India as well,” said Singhal. He suggested that a lower 0.1% transaction tax could still ensure traceability without stifling growth. “Now regulators are more closely talking to us, understanding what the space is.”
The global crypto landscape’s resurgence is being reflected in India too. Coinbase and Binance — the world’s largest exchanges, which had earlier exited the Indian market — have now returned. They are seeking to reestablish a presence in a domestic crypto market projected to grow from $2.5 billion in 2024 to over $15 billion by 2035, as per estimates from Grant Thornton.
“Competition has definitely started heating up,” said Kush Wadhwa, partner at Grant Thornton Bharat. He acknowledged the government’s concerns about money laundering and tax evasion but noted that “they’re not saying ‘don’t do it’, but they want a control on it.”
Shortly after Trump’s inauguration in January, India’s economic affairs secretary Ajay Seth announced plans to revise a key crypto policy paper. However, no tax relief was included in the Union Budget released in February, drawing criticism from the Bharat Web3 Association, which called it “disappointing.”
“Taxation is a concern,” added Naga Harish, senior associate at Bengaluru-based Mudrex. “It’s sort of a deal breaker.”
Tom Duff Gordon, Coinbase’s vice-president for international policy, noted that while taxation isn’t an immediate priority, there is long-term potential. “There may be a win-win where the government sees an opportunity to increase the tax base and to onshore some of that offshore activity,” he said.
The Reserve Bank of India (RBI) remains cautious. Once the sector’s fiercest critic — with a 2018 banking ban later overturned by the Supreme Court — the RBI’s stance appears to have softened.
In December, it warned of crypto’s potential impact on financial stability but refrained from direct attacks. CoinSwitch’s Singhal observed that the RBI’s approach has moved “from negative to neutral.”
Still, widespread public perception remains a hurdle. “Most of the people in India still think it’s illegal,” said Suril Desai, partner at Nishith Desai Associates, which had legally challenged the RBI’s earlier ban. “Youngsters from wealthy families are driving adoption by convincing their parents to invest.”
With a growing user base, returning global players, and renewed policy dialogue, India’s crypto industry hopes tax relief and regulatory clarity will soon follow.
