TLDR
- India is reviewing its crypto stance and revisiting a previously shelved discussion paper due to shifting global attitudes
- Current Indian crypto regulations include a 30% capital gains tax and 1% TDS on transactions
- The review is influenced by Donald Trump’s crypto-friendly policies in the US
- The original discussion paper was delayed in 2024 due to other priorities
- India’s Economic Affairs Secretary indicates the review is prompted by multiple jurisdictions changing their crypto outlook
The Indian government has announced a review of its cryptocurrency policies, marking a potential shift in its approach to digital assets. Economic Affairs Secretary Ajay Seth revealed in a Reuters interview that the government is revisiting a discussion paper on cryptocurrency regulation that was previously put on hold in 2024.
The current regulatory framework in India maintains strict oversight of cryptocurrency activities, with traders and investors subject to substantial taxation. Since 2022, the country has imposed a 30% capital gains tax on crypto profits and requires a 1% tax-deducted-at-source (TDS) on all cryptocurrency transactions.
These tax measures have remained unchanged despite ongoing appeals from the cryptocurrency sector for more favorable policies. Industry participants have consistently urged Prime Minister Narendra Modi’s government to reduce the tax burden and establish clearer regulatory guidelines to foster growth in the digital asset space.
The decision to review India’s crypto stance comes at a time when several countries are adopting more accommodating positions toward digital assets. This global shift has been particularly influenced by developments in the United States, where Donald Trump’s administration has demonstrated a crypto-friendly approach.
Economic Affairs Secretary Seth emphasized that multiple jurisdictions have modified their positions regarding cryptocurrency usage and acceptance. “In that stride, we are having a look at the discussion paper once again,” Seth stated in his interview with Reuters.
The original discussion paper, which aimed to outline India’s comprehensive approach to cryptocurrency regulation, was delayed in 2024 as government officials prioritized other matters. This postponement left many questions unanswered about the future of digital assets in one of the world’s largest economies.
Despite the current unregulated status of cryptocurrencies in India, the government has maintained strict oversight through its tax policies. These measures have effectively created a framework that acknowledges the existence of crypto trading while ensuring state revenue from such activities.
The cryptocurrency industry in India has faced challenges under the existing tax regime, with many businesses and traders arguing that the high rates have hindered market growth and innovation. The 1% TDS requirement, in particular, has been cited as a barrier to frequent trading and market liquidity.
The timing of India’s policy review coincides with broader international developments in cryptocurrency regulation. Various countries have begun to establish more defined regulatory frameworks for digital assets, moving away from previously restrictive positions.
The influence of U.S. policy changes under the Trump administration has been notable in shaping global attitudes toward cryptocurrency. The approval of various crypto-linked financial products in the U.S. has created precedents that other nations are considering in their own regulatory approaches.
India’s large technology-savvy population and growing digital economy make it a potentially important market for cryptocurrency adoption. The government’s willingness to revisit its stance suggests an acknowledgment of the evolving nature of digital assets and their role in the global financial system.
The review process involves examining how other jurisdictions have adapted their regulatory frameworks to accommodate cryptocurrency while maintaining appropriate oversight. This includes studying various approaches to taxation, trading regulations, and consumer protection measures.
The cryptocurrency sector in India has continued to operate and develop despite the challenging tax environment. Many companies have maintained their presence in the market, anticipating potential policy changes that could create more favorable conditions for growth.
The government’s decision to reexamine its crypto policies indicates a recognition of the changing global landscape in digital asset regulation. However, the specific outcomes of this review and any potential policy changes remain to be determined.
Seth’s comments suggest that the government is taking a measured approach to its policy review, considering both international developments and domestic market conditions in its assessment of cryptocurrency regulation.