India’s Crypto Sector Pushes for Tax Reforms Amid Policy Shift

India’s crypto sector is intensifying its efforts to lobby the government for tax reforms, capitalizing on a growing receptiveness to digital assets among policymakers. This shift in engagement is particularly notable following Donald Trump’s return to the White House and his vocal support for cryptocurrency. Industry leaders are advocating for a rollback of the steep taxes introduced in 2022, which include a 30% capital gains tax and a 1% levy on every crypto transaction. These measures, aimed at curbing illegal activities, have reportedly driven more than 90% of Indian crypto trading offshore, according to a report by the Esya Centre.

Industry executives propose that a 0.1% transaction tax could provide the same level of traceability without hindering growth. Ashish Singhal, co-founder of CoinSwitch, highlighted the increased frequency of meetings with officials, which have transitioned from biannual events to near-weekly discussions. He noted that regulators are now more engaged in understanding the crypto space, marking a significant shift from previous hostility. The Reserve Bank of India, which once compared crypto to Ponzi schemes and advocated for a banking ban in 2018, has since softened its stance. While the central bank remains skeptical, its relationship with the crypto industry has improved from negative to neutral.

This change in atmosphere coincides with New Delhi’s efforts to redraft a key industry discussion paper. The move was confirmed earlier this year by Ajay Seth, India’s economic affairs secretary, although no formal tax relief was included in February’s budget, disappointing the Bharat Web3 Association. The Supreme Court of India has also expressed concern over the government’s delay in forming comprehensive crypto policies, asking why clear-cut regulations have not yet been introduced. Despite the lack of immediate relief, international exchanges like Binance and Coinbase, which previously scaled back operations in India, have re-entered the market. The country’s crypto sector, currently valued at around $2.5 billion, is projected to grow to more than $15 billion by 2035, according to estimates by Grant Thornton.

Changing public perception remains a challenge, as many Indians still believe digital assets are illegal despite the absence of a formal ban. However, interest is rising among younger, tech-savvy investors, particularly those from wealthier backgrounds. As regulation continues to evolve, industry players hope to bring more of the sector back onshore and into the open, fostering a more transparent and regulated environment for crypto trading in India.