Sumit Gupta, CEO of CoinDCX, one of the largest cryptocurrency exchanges in India, recently highlighted the urgent need for a regulatory framework for the Virtual Digital Assets (VDAs) in India in his latest X posts. As India approaches the Union Budget 2025-26, Gupta highlights some key issues of high taxation and ambiguous regulations that are hindering innovation and India’s crypto ecosystem growth.
Gupta talked about the key challenges where the current framework imposes a heavy 30% capital gain tax and a 1% TDS on VDA transactions.
The challenges are not only for the users as it is also for the crypto businesses that exist in India. Because of the heavy taxation users are migrating to offshore platforms. According to the latest report, approximately 90% of the VDA trading volume worth over $73.17 billion (six hundred crores in Indian rupees) occurs on these offshore platforms which are outside of India’s jurisdiction.
Gupta said that these regulations are designed to bring transparency and monitor VDA transactions but they seriously impact the crypto space growth. The High-frequency traders who are important for maintaining market liquidity are now migrating to foreign platforms which is not good for the ecosystem.
Founders, investors, and developers have some high hopes for the upcoming budget 2025 and hoping for a policy shift that focuses on the innovation and development of the sector.
Key Expectations from Budget 2025
CoinDCX’s Sumit Gupta highlights some factors that can improve the growth of the sector while maintaining compliance and consumer protection.
Rationalize the TDS Rate
The first step would be reducing TDS from 1% to 0.01%. The move will make Indian exchanges more competitive and it will increase tax compliance as more traders will enter in ecosystem because of low TDS.
Growth-Friendly Tax Environment
A more balanced tax structure could also help in fostering sector growth. Imposing higher Tax on short-term gains while offering exemptions for long-term holdings would be better.
Streamlined Regulatory framework
Making a proper regulatory framework just like Singapore and Switzerland will align India’s policies with global best practices. Not only this it will attract more investors to the country and generate more revenues for the sector.
Final Thoughts
As Budget 2025 is approaching it will define the future of the Indian crypto ecosystem. Now it is a choice of the government whether they want to stick with their strict policies ignoring the sector potential or make crypto-friendly regulations and enter in the race for blockchain dominance.
Also Read: Explained: What Crypto Community Expects from India’s Budget 2025-26?
