India Reconsiders Crypto Stance Amid Global Shift; Budget Brings Tax Tightening

India is reevaluating its stance on cryptocurrency regulations, with a senior government official revealing that the long-anticipated discussion paper on digital assets may be delayed. This reconsideration comes as the U.S. adopts a more crypto-friendly approach under President Donald Trump, who recently signed an executive order to overhaul digital asset regulations. India's Economic Affairs Secretary Ajay Seth acknowledged the global shifts in crypto policies, stating that digital assets "don’t believe in borders."

Despite the potential policy review, India's 2025 Union Budget brought no relief for crypto traders. Finance Minister Nirmala Sitharaman proposed amendments to bring undisclosed crypto gains under Section 158B of the Income Tax Act, allowing retrospective audits on transactions dating back 48 months. Investors who have failed to report gains within the last 48 months could face a 70% penalty on unpaid taxes. The 30% tax on crypto gains remains in place, with no exemptions, deductions, or differentiation between short-term and long-term holdings. The controversial 1% Tax Deducted at Source (TDS) on every crypto transaction also stays, further discouraging active trading within the country.

The response from India's crypto industry has been mixed. CoinDCX CEO Sumit Gupta applauded the government's decision to revisit its crypto policy but urged for friendlier regulations and clarity. CoinSwitch co-founder Ashish Singhal called the budget a "mixed bag for crypto," pointing out that while the mandatory reporting of crypto transactions was a step toward legitimacy, the lack of tax relief was a major disappointment.

Crypto traders and investors are now awaiting the upcoming simplified Income Tax Act, set to be introduced in Parliament next week, for any last-minute surprises. As India reassesses its crypto policies, the industry eagerly awaits a balanced regulatory framework that encourages innovation while ensuring financial stability.