As the Union Budget 2025 approaches, India’s cryptocurrency and blockchain industry stakeholders are advocating for substantial reforms to unleash the sector’s potential and maintain India’s position as a global digital asset hub. Industry leaders have presented a comprehensive wishlist focusing on tax restructuring, regulatory frameworks, and innovation incentives.
Tax Reforms Take Center Stage
The current taxation framework, implemented in 2022, has emerged as a significant concern for the industry. With a steep 30% tax on virtual digital asset (VDA) gains and a 1% Tax Deducted at Source (TDS) on all crypto transactions, industry experts argue that these measures have pushed investors toward foreign platforms and hindered market growth.
“India has consistently ranked among the top nations in crypto adoption, but the high taxation has pushed investors towards foreign platforms, making tracking and compliance more challenging,” says Edul Patel, CEO & Co-founder of Mudrex. The industry is proposing a significant reduction in TDS from 1% to 0.01%, which they believe would improve tax compliance while maintaining market liquidity.
CoinSwitch Co-founder Ashish Singhal suggests raising the TDS threshold to Rs 5,00,000 to ease the burden on smaller investors. “The Virtual Digital Asset sector holds immense potential for India’s digital economy, but existing tax policies hinder its growth,” Singhal explains, advocating for aligning VDA taxation with other asset classes.
Regulatory Clarity and Innovation Support
Beyond tax reforms, the industry is seeking clear regulatory frameworks to foster innovation and attract investment. Bitget CEO Gracy Chen emphasizes that India’s regulatory approach is being closely watched globally. “A balanced approach in the 2025 Budget could provide immense potential for innovation and financial inclusion in crypto,” Chen notes.
The need for supporting blockchain and Web3 startups has emerged as a crucial focus area. Shardeum’s Head of Operations & Partnerships, Shahzad Nathani, suggests that “tax breaks for Web3 startups, dedicated funds, and regulatory reforms could drive growth and attract top talent.”
Education and Infrastructure Development
Aishwary Gupta, Global Head of Payments at Polygon Labs, highlights a significant education gap in understanding cryptocurrencies and blockchain technology. Real-world applications, such as JioSphere by Jio and Firedrops by Flipkart, demonstrate blockchain’s potential, but current tax structures pose challenges to innovation.
“Startups receiving global grants must pay 30% in taxes, unlike other businesses that benefit from DPIT certification exemptions,” Gupta points out, emphasizing how this disparity affects the ecosystem’s growth.
Industry Outlook
ZebPay COO Raj Karkara stresses the importance of aligning Indian crypto policies with global regulations. “Formal recognition of crypto as an asset class and clear regulatory guidelines would provide stability and safeguard investors,” says Karkara, advocating for policies that encourage blockchain and Web3 innovation.
The industry’s comprehensive wishlist reflects a mature understanding of the challenges and opportunities in the crypto space. As India positions itself as a potential global hub for decentralized finance and blockchain innovation, the upcoming budget’s treatment of these proposals could significantly impact the sector’s trajectory.
BuyUcoin CEO Shivam Thakral summarizes the industry sentiment: “India’s Web3 industry stands at a crossroads. Clear guidelines and reforms can help India harness blockchain technology to establish itself as a global leader in the digital economy.”
As the budget announcement approaches, the crypto industry remains hopeful that their recommendations will be considered, potentially marking a new chapter in India’s digital asset journey. The government’s response to these proposals could determine whether India emerges as a global crypto hub or risks losing ground in the rapidly evolving digital economy landscape.
