India's Perspective on Cryptocurrency: Between Strict Regulation and Uncertainty
India is generating intense debates about cryptocurrency policies. The government imposes a tax of up to 30% on profits from cryptocurrency transactions, does not allow loss offsetting, and applies a 1% Tax Deducted at Source (TDS) on all cryptocurrency transactions. However, instead of completely banning digital assets, the current policy keeps the market in a state of ambiguity between control and vagueness.
Conflicting Signals from India's Cryptocurrency Policy
The cryptocurrency market in India is clearly divided. While the CEO of the Indian Blockchain Union believes that strict regulations make the market more transparent, many domestic investors and exchanges are calling for reforms. They want to reduce the TDS rate from 1% to 0.01% and allow loss offsetting with profits to reduce tax burden. However, due to concerns about tax evasion and increasing cybercrime, authorities remain cautious about loosening regulations.
Indian Tax Authority Closely Monitors Cryptocurrency Traders
India's Income Tax Department has sent thousands of notices to individuals trading cryptocurrencies without fully declaring them in the fiscal years 2022–23 and 2023–24. Authorities suspect some investors are using cryptocurrencies as a tool for tax evasion, especially during a period of loose regulations.
Currently, traders must adjust their declarations through updated tax versions. CoinDCX co-founder Sumit Gupta advises all individuals to declare cryptocurrency income, including income from Airdrop or transactions on international exchanges, to ensure legal compliance.
India's Cryptocurrency Tax Law Hinders Development
India's current cryptocurrency tax policy includes key points: 30% tax on digital asset profits, no loss offsetting, and 1% TDS on transactions over 10,000 Rs. These regulations have caused many large international exchanges to withdraw from the Indian market. Even domestic platforms are under significant pressure, calling for adjustments to the TDS rate and tax structure to promote sustainable investment and development.
Increasing Cryptocurrency Crime - India's Concern
The rapidly increasing cryptocurrency-related crime has become a barrier to policy relaxation. The Central Bureau of Investigation (CBI) has arrested multiple individuals involved in large-scale fraud:
Recently, CBI arrested Rahul Arora, seizing over 7.5 billion INR (327,000 USD) in cryptocurrency related to fraud in the US and Canada.
The February GainBitcoin scandal led to raids at 60 locations, confiscating approximately 69 million USD in digital assets. Total damages are estimated at over 18,400 billion INR (800 million USD) in this large-scale multi-level fraud.
The CBI is currently developing an internal system to track and seize cryptoassets, indicating the government prioritizes creating a safe environment before considering regulation relaxation.
Conclusion: India Cautious about Cryptocurrency, Not Rushing to Open Widely
India does not oppose cryptocurrency but has not fully accepted it either. With numerous tax notices sent to investors, the withdrawal of foreign exchanges, and increasing cybercrime, the government's focus remains on compliance and safety, rather than rapid market development. Until a comprehensive and transparent legal framework is established, a truly cryptocurrency-friendly economy in India remains distant.
