- India Budget 2026 may focus on crypto tax clarity, TDS rules, and compliance tweaks.
- 1% TDS under Section 194S sparks concern, affecting liquidity and compliance for investors.
- Crypto loss set-off rules remain restricted, barring offsets against gains from other assets.
India’s Budget 2026 is widely expected to focus on rationalisation and regulatory clarity on cryptocurrency taxation rather than introducing more aggressive tax measures. As interest in digital assets continues to rise among Indian investors, existing tax provisions on Virtual Digital Assets (VDAs) remain a central point of discussion ahead of the annual budget.
Cryptocurrencies are currently subject to a 30% income tax, plus a 1% tax deducted at source (TDS) on transactions. Market participants have repeatedly flagged that these measures, introduced to improve reporting and compliance, have also increased costs and operational complexity for investors and platforms.
With Budget 2026 approaching, expectations are building around whether the government will recalibrate this framework or maintain the existing structure.
30% Crypto Tax Under Review, But No Official Signal
At present, there has been no formal indication from the government suggesting a reduction in the 30% tax on cryptocurrency income. The provision continues to apply uniformly across VDAs, without allowing loss set-offs against other income categories.
However, the broader discussion around India’s Budget 2026 crypto taxation has increasingly centred on whether the current regime aligns with the country’s evolving digital asset ecosystem. Tax experts note that clarity, rather than rate cuts alone, remains the key demand from stakeholders.
TDS and Loss Set-Off Rules in Focus
One of the most frequently cited expectations relates to the 1% TDS under Section 194S. According to industry participants, the current rate has affected liquidity and trading efficiency, with some investors shifting activity to offshore platforms.
Experts have pointed out that a reduction in the TDS rate or an increase in transaction thresholds could ease compliance pressure while still preserving traceability. Loss set-off rules are also under scrutiny, as the existing framework disallows adjusting crypto losses against gains from other assets.
As India transitions toward a more structured digital asset environment, Budget 2026 is widely expected to emphasise predictability and consistency in crypto taxation. While sweeping changes appear unlikely without prior consultation, market observers continue to watch for incremental adjustments that could improve compliance and transparency.
Related: Indian Crypto Trading Shifted Offshore in FY25 Amid Tax Pressures
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