Major cryptocurrency exchanges are seeking tax relief and regulatory clarity on Virtual Digital Assets (VDAs) from the upcoming Union Budget, according to senior industry executives.
An industry expert, says the VDA sector is ‘naturally’ looking for measured relief, especially since it has been four years since the current taxation framework was introduced. “The decisions taken now can meaningfully accelerate innovation and help India emerge as a global Web3 & VDA leader. The way forward lies in pragmatic reforms that bring users back to compliant platforms while strengthening compliance,” he says.
“A critical first step is ensuring clarity in rules and mandating that all crypto exchanges uniformly implement TDS provisions, which will improve compliance and enhance citizen protection against questionable, non compliant operators through improved adherence to regulations. Reducing TDS from 1 per cent to 0.01 per cent would retain monitoring while removing the primary incentive for offshore migration, encouraging users to return to Indian platforms and restoring transaction visibility under government oversight,” he said, adding that aligning the 30 per cent capital gains tax with income tax slabs, along with allowing loss offsetting and standard business deductions for Web3 ventures, would help create a future-ready ecosystem.
Financial stability
Another industry expert, called for introducing measured regulatory and tax refinements that protect users, maintain financial stability, and support responsible market development. “From a tax perspective, a pragmatic framework focused on capital gains realised, with provisions for limited loss set off and removal on transaction level levies in favour of net-revenue generating corporate taxes instead, can improve fairness for retail participants and indicate to them India has moved past the tax-and-deter regime towards a fuller license-and-supervise one,” he said.
Another industry expert says the priority should be to back compliant domestic platforms that follow Indian KYC/AML norms, capital controls rules, and protect consumers’ data.
“Recent estimates suggest that Indians contributed close to ₹5 lakh crore in trade volume on offshore exchanges between October 2024 and October 2025, highlighting how quickly trading activity and value can migrate outside the country,” he said.
“When platforms sit beyond Indian jurisdiction, oversight weakens, consumer grievance redressal becomes limited, and the economic value created by Indian users disproportionately flows overseas. We lose the jobs that this industry creates and the economic value it creates. More importantly, relying on non-accountable foreign platforms for critical financial infrastructure introduces systemic risk—especially during periods of geopolitical or market stress,” he added.
