Amid crypto investors’ persistent outcry and the loss of billions in crypto trading volume to offshore platforms in recent years, India stood firmly on its decision to maintain the punitive 30% flat tax and 1% Tax Deducted at Source (TDS) rates it imposed in February 2022.
Since the enactment of India’s broad crypto tax framework, local investors have pressured the government to abolish, or at the very least, reduce the 30% tax on gains from crypto transactions that have crippled domestic exchanges. However, their cries fell on deaf ears as Finance Minister Nirmala Sitharaman recently announced during his Budget 2026-2027 presentation that it will maintain its tax regime.
This means that local investors will continue to have the same limit, hindering them from offsetting losses from sudden price drops or security breaches that happen often in the volatile crypto market, while the 1% TDS on every trade impacts liquidity.
The unchanged policy has raised doubts about the sustainability of crypto trading in India and has been met with criticism from market participants. In an interview with Decrypt, Pranav Agarwal of Jetking Infotrain India said maintaining the tax regime is part of the government’s efforts to ensure that the market remains in compliance with regulations, a point seconded by CA Sonu Jain of 9Point Capital.
Sonu said that India’s priorities aren’t focused on revisiting its crypto policies, “but on strengthening enforcement, reporting, and compliance,” considering that talks with G20 member states about a standard framework are ongoing.
With regard to compliance, other developments announced by Sitharaman on last week included amendments to the Finance Bill, comprising proposals to enact a daily fine of INR 200 lakh ($2.20) for non-filing and a fixed charge of INR 50,000 lakh ($545) for inaccurate disclosures of crypto transactions.
While India has reinforced its crypto policies, the government has relaxed the criminal liability for TDS defaulters, cutting the jail time to a maximum of two years from the previous seven years.
India champions efficiency with CBDC-based food coupon
While investors are still reeling from the unchanged crypto tax policy, developments using emerging technologies continue to gather steam in the country, with the Reserve Bank of India (RBI) announcing the pilot for its “digital food coupons” to be held this month.
Under the pilot program, the central bank will issue digital rupees straight to a partner bank, which will then turn the programmable central bank digital currency (CBDC) into a special digital coupon for selected beneficiaries. The beneficiaries will have a dedicated digital wallet to store these digital food coupons.
The RBI said the digital food coupons cannot be taken out as cash or spent like regular money; it’s only intended to buy specific food grains at shops authorized by the central bank for the program.
This will be the first time that India will utilize its digital rupee in the public distribution system, promoting efficiency and fairness while ensuring the government budget for food rations is being spent by targeted individuals as intended. The scheme is also expected to curb the issue of ghost beneficiaries in the country.
The Union Territories of Chandigarh and Puducherry will be the test-bed for the program, according to local reports. If successful, the RBI reportedly plans to expand the initiative to more local states.
Watch: India is going to be the frontrunner in digitalization
Source: https://coingeek.com/india-holds-ground-on-crypto-tax-cuts-jail-time-for-defaults/
