India is re-evaluating its approach to digital assets, which may delay the long-awaited discussion paper on crypto regulations. The paper was initially expected in September 2024.
Ajay Seth, India’s Economic Affairs Secretary, explained the government’s new approach. He noted that multiple countries have adjusted their crypto policies, influencing India’s decision to revisit its own framework.
This shift follows recent developments in the U.S., where President Donald Trump has introduced new policies aimed at making the country more crypto-friendly. While Seth did not mention the U.S. directly, he acknowledged that India’s crypto policy must align with international trends.
Industry leaders welcome this reconsideration. Saravanan Pandian, CEO of KoinBX, emphasized that India must develop a balanced regulatory framework that encourages innovation while ensuring financial stability.
Budget 2025 Came With Stricter Tax Rules for Crypto Investors
Despite a potential policy shift, India’s new budget offers no tax relief for crypto traders. Instead, crypto regulation in India have become even stricter.
The 2025 Union Budget introduces a new amendment under Section 158B of the Income Tax Act. This allows authorities to audit undisclosed crypto gains from the past 48 months. Investors who failed to report their earnings could face a 70% penalty on unpaid taxes.
India will impose tax penalties of up to 70% on undisclosed crypto profits. Source: XAdditionally, the 30% tax on crypto gains remains unchanged. This tax applies to all profits, with no exemptions or deductions. The 1% Tax Deducted at Source (TDS) on every crypto transaction also continues, making trading within India costly.
Industry Leaders Call for Clarity and Fairer Crypto Regulation in India
Crypto industry leaders expressed mixed reactions to the budget. Some welcomed the government’s willingness to revisit regulations, while others criticized the lack of tax relief.
A crypto educator raising questions regarding the 30% tax on crypto gains. Source: XSumit Gupta, CEO of CoinDCX, highlighted India’s strong position in global crypto adoption. He urged the government to introduce clear and friendly policies, arguing that Web3 could add $1.1 trillion to India’s economy by 2032.
Ashish Singhal, co-founder of CoinSwitch, called the budget a “mixed bag.” He acknowledged that the government was taking steps toward legitimacy by requiring mandatory reporting of crypto transactions. However, he pointed out that the high taxes make trading in India expensive.
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Crypto traders and investors are now waiting for the upcoming Income Tax Act, set to be introduced in Parliament next week. Any last-minute changes could impact the future of crypto regulation in India.
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