Crypto tax cuts in Budget 2025? Indian industry hopes for relief from FM Nirmala Sitharaman

As the Union Budget 2025 approaches, the cryptocurrency industry in India anticipates a more favourable tax and regulatory environment. India has consistently ranked among the top nations in crypto adoption. However, the sector still faces challenges from the 2022 Union Budget, which imposed higher taxes, including a 1% TDS on crypto transactions and restrictions on offsetting losses against gains.

Industry leaders are now looking for a more balanced and progressive approach that could drive positive momentum in the sector. Key expectations include reducing the TDS on crypto transactions to 0.01%, allowing the offsetting of losses, and lowering the tax rate on virtual digital assets (VDAs). Experts believe these reforms could stimulate growth, improve compliance, and prevent investors from moving to foreign exchanges.

Crypto sector seeks income tax reforms ahead of Union Budget 2025

“The 1% TDS on crypto transactions led many investors and traders to turn towards foreign exchanges, making it harder for the government to track activity. Additionally, the inability to offset losses against gains has further discouraged investor participation.

As this year’s budget nears, we look forward to a more balanced and progressive approach to encourage innovation and support sustainable growth for the sector. A reduction of TDS down to 0.01% and the allowance for offsetting losses could significantly benefit investors and drive positive momentum in the industry,” said Edul Patel, Co-founder & CEO of Mudrex

With Bitcoin and the crypto market making impressive gains on a global level, the Indian investors are missing these splendid opportunities because of the high taxation regime currently in operation. Tax lowering would empower Indian investors to invest in this growing industry for higher returns, stimulating financial growth and innovation within India.

“For the development of the crypto industry in India, I believe that the Union Budget 2025 should target the reduction of tax on virtual digital assets below 30% and cut the TDS on all transactions from 1% to 0.01%. It is equally important to provide for the set-off and carry-forward of losses in VDA transactions. These reforms seem necessary to create a level playing field for crypto investors and traders. Lower taxes will boost compliance. Such reforms will reshape the industry and prevent investors from moving to exchanges abroad. India could lead the global Web3 and blockchain renaissance, especially if a fair and friendly tax regime is implemented, ensuring the inclusion and regulation for all investors,” said Avinash Shekhar, Co-founder, and CEO, Pi42.

2024 has been a year of significant growth, marked by Bitcoin surpassing $100K and a surge in institutional investment.

“With these developments, there is an opportunity for India to introduce progressive measures in the upcoming budget that can positively impact the industry, reinforcing India’s leadership in the global digital economy.

We strongly believe that a balanced regulatory framework is key to unlocking the full potential of the VDA space in India. Such a framework should encourage innovation, promote transparency, and ensure robust investor protection. Policymakers must work closely with industry leaders to create regulations that are both forward-thinking and adaptable to the rapidly evolving nature of digital assets,” said Vishal Sacheendran, Head of Markets, Binance

“It is pivotal for India to align its crypto policies with the global regulatory framework to harness the industry’s potential fully. We hope the Union Budget 2025 will introduce progressive measures such as revisiting the 30% tax on crypto income and the 1% TDS mechanism. Simplified tax structures can encourage wider participation while boosting liquidity and trading volumes. Recognition of crypto as a formal asset class, with clear classifications, is another critical step,” said Raj Karkara, COO, of ZebPay.

With the Union Budget 2025 approaching, India’s crypto industry hopes for reforms to address the challenges of the 2022 tax changes and foster growth.

Disclaimer: The views and recommendations made above are those of individual analysts, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.