Indian Government Upholds 1% TDS on Crypto Despite Industry Pushback

The Indian government has taken a firm stance on stringent crypto regulations, particularly by maintaining the 1% tax deducted at source (TDS) on crypto transactions despite significant pushback from the industry. The continued enforcement of this policy highlights the government’s prioritization of strict regulation over accommodating the emerging crypto sector’s demands. The Bharat Web3 Association (BWA), a prominent body advocating for crypto reforms in India, argues that the high TDS rate is causing capital flight to overseas and decentralized exchanges. In response to this regulatory environment, the BWA has requested a reduction in the TDS rate to 0.01% and the introduction of a progressive tax system that would allow investors to offset losses against gains, similar to norms in other asset classes.

However, any shift in tax policy seems improbable in the current political climate. With Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) forming a coalition government focused on addressing broader economic needs and meeting the demands of coalition partners requiring over $15 billion, accommodating the crypto sector’s requests appears unlikely. Additionally, industry experts, including Rajat Mittal, a Supreme Court crypto tax counsel, emphasize that the government’s commitment to regulatory rigor over reducing TDS rates suggests a low probability of imminent relief for the crypto market. This scenario underscores the broader governance priorities that seem to overshadow the immediate needs of the burgeoning crypto industry, creating an environment of regulatory uncertainty.

The Role of the Bharat Web3 Association

The Bharat Web3 Association has been at the forefront of advocating for crypto reforms in India, highlighting how the high TDS rate is driving capital away from domestic exchanges towards overseas and decentralized platforms. The BWA’s proposal to reduce the TDS rate to 0.01% and introduce a progressive tax system aims to align crypto taxation with norms applicable to other asset classes. Such measures, they argue, could mitigate capital flight and foster a more stable and fair market environment. The BWA’s efforts indicate a growing recognition within the industry of the need for a more balanced regulatory framework that can support the sector’s growth while ensuring compliance and transparency.

Despite these efforts, the government’s inclusion of the BWA in pre-budget consultations has offered a glimmer of hope for future reforms. This marks a shift from previous years when the industry lacked such access to policymakers. However, recent events, such as the $230 million hack of WazirX, a significant Indian crypto exchange, have potentially complicated the BWA’s advocacy efforts. High-profile security breaches cast a shadow over the industry’s credibility and may reduce the urgency the government might feel to address the sector’s tax concerns. Nonetheless, the BWA remains optimistic about its role in shaping a more conducive regulatory environment for crypto in India, viewing the consultation inclusion as a step towards more meaningful dialogue with policymakers.

Government’s Focus on Regulation Over Tax Policy Change

The Indian government remains steadfast in imposing stringent crypto regulations, notably upholding the 1% tax deducted at source (TDS) on crypto transactions despite industry opposition. This policy showcases the government’s priority on strict regulation rather than meeting the crypto sector’s demands. The Bharat Web3 Association (BWA), a key advocate for crypto reforms, contends that the high TDS rate is driving capital away to overseas and decentralized exchanges. In response, BWA has proposed reducing the TDS rate to 0.01% and instituting a progressive tax system that would allow investors to offset losses against gains—similar to other asset classes.

Nonetheless, changes to the tax policy seem unlikely given the current political atmosphere. Prime Minister Narendra Modi’s Bharatiya Janata Party (BJP) leads a coalition government that is focused on broader economic issues and satisfying coalition partners’ needs, which entail over $15 billion. Thus, accommodating the crypto sector’s requests seems improbable. Moreover, industry experts, like Supreme Court crypto tax counsel Rajat Mittal, stress that the government’s focus on regulatory rigor over TDS reduction suggests a minimal chance of immediate relief for the crypto market. This situation highlights the broader governance priorities overshadowing the emerging crypto industry’s needs, creating a landscape of regulatory uncertainty.

Explore more

How Firm Size Shapes Embedded Finance Strategy

The rapid transformation of mundane business platforms into sophisticated financial ecosystems has effectively redrawn the competitive boundaries for companies operating in the modern economy. In this environment, the integration of banking, payments, and lending services directly into a non-financial company’s digital interface is no longer a luxury for the avant-garde but a baseline requirement for economic viability. Whether a company

What Is Embedded Finance vs. BaaS in the 2026 Landscape?

The modern consumer no longer wakes up with the intention of visiting a bank, because the very concept of a financial institution has migrated from a physical storefront into the digital oxygen of everyday life. This transformation marks the definitive end of banking as a standalone chore, replacing it with a fluid experience where capital management is an invisible byproduct

How Can Payroll Analytics Improve Government Efficiency?

While the hum of a government office often suggests a routine of paperwork and protocol, the digital pulses within its payroll systems represent the heartbeat of a nation’s economic stability. In many public administrations, payroll data is viewed as little more than a digital receipt—a record of transactions that concludes once a salary reaches a bank account. Yet, this information

Global RPA Market to Hit $50 Billion by 2033 as AI Adoption Surges

The quiet hum of high-speed data processing has replaced the frantic clicking of keyboards in modern back offices, marking a permanent shift in how global businesses manage their most critical internal operations. This transition is not merely about speed; it is about the fundamental transformation of human-led workflows into self-sustaining digital systems. As organizations move deeper into the current decade,

New AGILE Framework to Guide AI in Canada’s Financial Sector

The quiet hum of servers across Canada’s financial heartland now dictates more than just basic transactions; it increasingly determines who qualifies for a mortgage or how a retirement fund reacts to global volatility. As algorithms transition from the shadows of back-office automation to the forefront of consumer-facing decisions, the stakes for oversight have never been higher. The findings from the