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<figure class="img_container" style="width:1893px;;margin-bottom:5px;max-width:100%;"><img width="590" height="442" class="unveil" loading="eager" style="width:100%;max-height:100%" src="https://etimg.etb2bimg.com/photo/123358542.cms" captionrendered="1" alt="Illustrative"/><figcaption class="caption"><span>Illustrative</span></figcaption></figure>Indian Tax Authority Seeks Input on Cryptocurrency Regulation
Mumbai: The primary tax authority in India is engaging with cryptocurrency stakeholders to assess the necessity of enacting specific legislation for virtual digital assets (VDAs). This inquiry includes determining the appropriate regulatory body to oversee such laws and evaluating whether the current tax structure is prompting businesses and investors to move their operations abroad.
The Central Board of Direct Taxes (CBDT) has also posed questions to crypto exchanges regarding the 1% tax-deducted-at-source (TDS) applied to each transaction. The agency is interested in understanding if this rate is perceived as excessive, what an ideal TDS rate would be, and the rationale behind it. Another point of consideration is whether traders should be permitted to offset VDA-related losses against profits to ensure a fairer tax burden.
These inquiries, which address a range of challenges within the cryptocurrency sector, have sparked optimism within an industry struggling with high taxes, a lack of clear regulations, and the Reserve Bank of India’s (RBI) general hesitancy towards digital currencies. Currently, profits from crypto investments are taxed at a 30% income tax rate—higher than the capital gains tax applied to stock earnings—and VDA traders cannot use losses to reduce their taxable income.
Furthermore, major banks are reportedly hesitant to provide dedicated accounts for cryptocurrency transactions due to concerns voiced by senior officials at the central bank about VDAs.
Ambiguity also exists under RBI regulations and the Foreign Exchange Management Act (FEMA) concerning the ability of Indian residents to trade cryptocurrencies on international platforms.
The combination of these factors has led numerous substantial crypto investors to shift their trading activities, and in some cases even their residency, to locations like Dubai, which aspires to establish itself as a leading global crypto hub.
India might be reconsidering its stance, especially given the increasing adoption of cryptocurrencies in developed economies and the emergence of digital currencies as legitimate asset classes within US mutual funds.
With China being the only major country with a complete ban on cryptocurrencies, the global trend is leaning towards regulation rather than outright prohibition, according to industry experts.
Purushottam Anand, an advocate and the founder of Crypto Legal, a firm specializing in blockchain and crypto law, stated, “Considering the G20 discussions, recent financial communiques, and the Parliamentary Committee on Finance’s decision to conduct a detailed examination of VDAs this year, it seems probable that the government will introduce comprehensive regulations for virtual digital assets.”
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<li>Published On Aug 18, 2025 at 12:36 PM IST</li>
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