India's cryptocurrency scene is stepping into a muted but deep change. While not ever visible to the broader population, there is surfacing waves of conversation between market stakeholders and regulators—a change that is subtle but deep in its deviation from acrimony toward collaborative spirit.
Since the 30% tax on capital gains and 1% TDS on crypto transactions were made effective in 2022, the Indian cryptocurrency space has been affected by a wave of disruption. The harsh taxation resulted in a drastic fall in local activity, with well over 90% of trading volume migrating to international exchanges. Indian websites could not retain users, and various crypto businessmen relocated their operations to countries with more favorable regulatory environments.
But the break of dawn for the new chapter is quickly unravelling. Global developments in the regulation of digital assets and continuous efforts by Indian crypto players are setting the stage for ground-level scrutiny of the policy. Instead of taking a step back, the space now is pushing for being part of co-creating a balanced and growth-driven regulatory ecosystem.
Policy Discussions Gathering Pace
In the recent months, there has been a significant increase in unofficial consultations between India's crypto custodians and policy drivers. These meetings, though unofficially recorded, are contributing significantly to the creation of a new approach towards crypto taxation and regulation.
Among the proposals on the table is reducing the 1% TDS to 0.1%. The reduction is seen as a key step towards revitalizing transaction volume on Indian bourses and assisting in satisfying the shortage of liquidity that followed the implementation of the first rule. Another concern is the 30% tax on capital gains, which, compared to taxation on other money instruments, lacks loss offsetting provisions and is viewed as unfair in its punitive nature towards investors and traders.
Industry representatives who have taken part in these negotiations are advocating for compliance and openness rather than exceptions. Their intention is to align crypto taxation policies with those imposed on other digital financial products so that India's tax regime would be fair and future-oriented.
Global Developments Shape Domestic Thinking
Global policy directions are also impacting India's current crypto discussion, as well. What occurs in nations such as the United States—where pro-crypto policy creation is gaining strength—is being tracked extremely closely by Indian policymakers and economic strategists.
These international trends have fueled internal discussions on how India can position itself in the global Web3 universe. While digital finance evolves at a rate all over the world, there is increasing pressure not to let India fall behind nascent economic opportunities in the blockchain and crypto universe.
This global-to-local effect is making Indian policymakers rethink the control-innovation balance. They are attempting to both regulate well and establish an environment that ought to include responsible crypto innovation.
Information and Strategy Drive Engagement
One of the key drivers of these off-stage negotiations is data. The crypto industry has highlighted estimates outlining the potential economic roles of a more inclusive and modern tax regime. Projections show that, with the right system, India's domestic cryptocurrency market can grow to $15 billion by 2035. Besides that, the sector is set to generate tens of thousands of good-job opportunities, particularly in the areas of blockchain development, cyber security, and digital finances.
In addition, stakeholders have emphasized the need to bring crypto trading back into India's regulatory sphere. Offshoring has reduced supervision, tax reporting, and customer protection—concerns to be mitigated with more organized, regulated domestic conditions.
The dialogue represents a clear turning point: no longer is the industry merely reacting to policy, but now it is working affirmatively to shape policy using evidence, research, and strategic counsel.
Possible Changes Under Discussion
While no policy decisions have officially been made, there are a few proposals in serious contemplation. Some of them are:
TDS Reduction: A cut from 1% to 0.1% is seen as a reasonable measure to revive domestic trade activity without diluting tax discipline.
Reconsideration of Capital Gains: Review of the 30% across-the-board rate so as to align it closer to the treatment of other financial assets.
Loss Offset Allowance: Creating mechanisms to offset losses in trading so that crypto comes on par with equity and mutual fund investment.
The reforms here are not a softening, but a pragmatic reform to increase compliance, encourage domestic investment, and support long-term economic growth.
Moving Toward Balanced Regulation
Though the 2025 Union Budget did not speak explicitly of crypto reforms, the prominence of recent deliberations indicates that policy changes could be in the offing. Future fiscal cycles may see incremental adjustments—starting with TDS—designed to reduce frictions at the cost of diluting regulation.
India's crypto landscape is no longer on the fringes. With inputs, recommending implementable proposals, and adopting global best practices, the stakeholders are making it easier for a more mature regulatory environment. As India considers its digital economy vision, crypto has again been placed on the agenda—not with din, but with intention.
Whether or not India emerges as a champion of the world's Web3 revolution will depend on how these behind-the-scenes debates are translated into policy implementation. But this much is becoming clear: the path to reform is no longer blocked—it's being paved, step by step, from within.