No Relief For Crypto Investors As India Retains Current Crypto Tax In Budget 2026

The Indian crypto investment community faced a crushing blow following the presentation of the Union Budget 2026, as Finance Minister (FM) [Name Placeholder] confirmed the continuation of the current, highly restrictive taxation framework for Virtual Digital Assets (VDAs). Despite widespread lobbying efforts from industry stakeholders and investor groups, the government opted against any rationalization of the tax structure introduced in 2022.

The core of the disappointment lies in the retention of the punishing three-pronged tax regime: a 30% flat tax on all income derived from VDA transfers, the mandatory 1% Tax Deducted at Source (TDS) on transactions exceeding a specified threshold, and critically, the continuation of the rule preventing investors from setting off losses incurred from VDA trading against any other income or even against gains from other crypto assets.

Industry leaders had been hopeful for a move toward the equity or securities tax model, where short-term capital gains are taxed at a lower rate and losses are permitted to be carried forward or set off. The FM, however, reiterated the government’s stance that the taxation structure reflects the need for revenue stability and acknowledges the volatile and speculative nature of the asset class.

Nischal Shetty, a leading crypto entrepreneur, noted that the high tax burden, especially the inability to offset losses, significantly stifles legitimate trading activity and promotes migration to foreign, unregulated exchanges. “This budget ensures that India remains uncompetitive in the global crypto finance space. We are essentially exporting capital and jobs,” he commented.

The retention of the TDS provision also continues to place significant compliance burden on exchanges and professional traders, contributing to the thin liquidity observed in domestic markets. Analysts predict that without tax relief, institutional participation in the Indian VDA ecosystem will remain minimal throughout the coming fiscal year, marking 2026 as another year of stagnation for domestic crypto innovation.

Source: No Relief For Crypto Investors As India Retains Current Crypto Tax In Budget 2026