India moves closer to crypto tax reform
Experts expect India to shift towards regulatory clarity, with growing signs of a comprehensive law on digital assets in the near future.
India’s tax authority has formally engaged cryptocurrency platforms to gather feedback on how the country should regulate virtual digital assets (VDAs). The Central Board of Direct Taxes (CBDT) has issued a questionnaire, signalling plans to review current rules and explore a new law.
The consultation focuses on contentious issues such as the flat 30% tax on crypto gains, the 1% tax deducted at source (TDS) on every transaction, and the inability to offset losses. Industry players say the measures have drained liquidity and driven traders to more favourable markets like Dubai.
Banks’ reluctance to support crypto-linked accounts has further complicated matters.
Platforms have been asked to suggest whether a dedicated VDA law should be established, and which regulator-SEBI, the RBI, MeitY, or the FIU-IND-should oversee it. The CBDT seeks feedback on the OECD’s Crypto-Asset Reporting Framework, supported by India for coordinated global regulation.
Legal experts believe India is preparing for a comprehensive framework in the coming year, following its G20 advocacy for global cooperation on digital asset regulation. Industry voices suggest the government is moving towards regulatory clarity rather than continued uncertainty.
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