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Budget 2026–27: Crypto Industry Continues to Push for Tax Rationalisation
- Ripradaman R
- 14 minutes ago
- 2 min read
Introduction
Four years after India introduced a dedicated tax framework for crypto, industry concerns remain unresolved.
Ahead of Budget 2026–27, crypto players are once again lobbying for meaningful tax reforms.
The focus is on liquidity, competitiveness, and regulatory balance.
What the Crypto Industry Is Demanding
The industry’s core demands have remained consistent.
Key asks include:
Rationalisation of crypto taxation
Permission for loss set-off against gains
Higher TDS threshold for transactions
Industry stakeholders argue the current framework discourages compliant participation.
The 1% TDS Issue and Its Market Impact
The 1% TDS on every crypto transaction has significantly altered market behaviour.
Observed consequences:
Reduced trading volumes on Indian exchanges
Increased friction for high-frequency traders
Capital moving to offshore platforms
The tax has acted more as a liquidity drain than a revenue generator.
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Push to Raise the TDS Threshold
The crypto sector is seeking an increase in the TDS applicability threshold.
Current proposal:
Raise annual TDS deduction threshold to ₹5 lakh
Reduce compliance burden for small and mid-sized investors
Industry experts believe this could revive domestic participation.
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Loss Set-Off: A Key Structural Concern
Unlike other asset classes, crypto losses cannot be set off against gains.
This creates:
Asymmetric tax treatment
Higher effective tax burden
Reduced risk appetite among investors
Allowing loss set-off is viewed as a basic correction, not a concession.
Shift of Trading Activity Offshore
Tax rigidity has led to unintended regulatory consequences.
Key trends:
Migration of Indian traders to overseas platforms
Reduced visibility for Indian regulators
Loss of domestic innovation and exchange competitiveness
Experts warn this weakens India’s oversight rather than strengthening it.
Interesting Read:
Budget 2026–27: What the Industry Is Hoping For
The upcoming budget is seen as an opportunity for course correction.
Industry expectations:
Pragmatic tax adjustments without diluting oversight
Policy signals encouraging onshore participation
Alignment with global best practices
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Conclusion
India’s crypto tax framework remains a work in progress.
Budget 2026–27 could determine whether the sector regains domestic momentum or continues shifting offshore.
Balanced reform, not deregulation, is what the industry is seeking.
FAQ
Q1. What is the main crypto industry demand in Budget 2026–27?
Tax rationalisation, including loss set-off and TDS relief.
Q2. Why is the 1% TDS controversial?
It reduces liquidity and pushes trading to offshore platforms.
Q3. What TDS change is the industry proposing?
Raising the annual threshold to ₹5 lakh.
Q4. Are crypto losses allowed to be set off in India?
No, current rules do not permit loss set-off.
Q5. Will Budget 2026–27 change crypto taxation?
There is no confirmation yet, but industry pressure remains strong.
Citations
Bloomberg Crypto Coverage
Ministry of Finance, Government of India
Industry Tax Policy Submissions
Economic Survey of India
Expert Commentary on Virtual Digital Assets
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