Author
Sujha Sundararajan
Author
Sujha Sundararajan
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India’s top tax authority has raised several questions to local crypto players whether India needs a new digital assets law. The Central Board of Direct Taxes (CBDT) has also inquired whether the 1% tax-deducted-at-source (TDS) on every sale is excessive.
Per a report by The Economic Times, the tax body has requested that crypto platforms submit their responses by mid-August.
The CBDT has raised a flurry of questions, including whether the 30% flat tax has affected volumes and liquidity. Further, it is seeking inputs on tax measures to ensure a level playing field between domestic and offshore crypto exchanges.
Additionally, the agency has asked whether there was a lack of legal clarity in derivatives and cross-border crypto transactions. This comes at a time when some local exchanges announced offering derivative products like crypto futures. For instance, CoinDCX provides up to a maximum leverage of 100x for certain pairs.
Will India Introduce a Comprehensive Crypto Tax, Regulation?
CBDT’s move to consult local players in setting a definitive crypto legislation has raised hopes among the community, which has been struggling with stiff taxes.
Besides, India’s crypto sector has been stepping up efforts to lobby the government for tax reforms. They have demanded a rollback on the 30% capital gains tax and a 1% levy on every crypto transaction.
Further, pro-crypto laws by advanced jurisdictions and the emerging overall crypto market, pushed by the US crypto ETF inflows, have triggered India to possibly change track from its skeptical view on the asset class.
“It is likely that the government will introduce a comprehensive virtual digital asset regulation,” Purushottam Anand, advocate and founder of Crypto Legal, told the ET. He expressed optimism, drawing parallels with India’s G20 Synthesis Paper consideration and the recent announcement by the Parliamentary Standing Committee on Finance to explore a detailed crypto examination this year.
However, given the Reserve Bank of India’s continuous negative stance on crypto, an imminent crypto policy could be a challenge.
Anand noted that China is the only major economy to impose a blanket ban on crypto, but the global consensus is “clearly leaning towards regulation.”
India Is Certainly Shifting Toward Crypto Engagement
Indian crypto players have shed their positive stance toward India’s potential to emerge as a leading crypto-inclusive economy.
Sumit Gupta, co-founder and CEO of CoinDCX, highlighted how India played a significant role in advancing the global crypto conversation during its G20 presidency.
“These markets are moving quickly to integrate crypto into their financial systems in a way that supports both innovation and consumer protection,” Gupta told Cryptonews. “What India really needs now is a clear, long-term roadmap.”
Further, Ashish Singhal, co-founder of CoinSwitch exchange, said that regulators are having active conversations with local crypto players.
Speaking to the Financial Times in May, Singhal said that the RBI’s tone towards crypto has relaxed. “The relationship with the RBI has gone from negative to neutral,” he noted. “I will still not quite call it positive yet.”
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