India Crypto Leaders Flag Tax Hurdles, Seek Regulatory Clarity

India’s Crypto Debate Turns on Tax Design, Trust and New Uses

The industry says clearer rules and better-fitting tax treatment could help address concerns as digital-asset use widens beyond trading.

Tax treatment remains a practical concern for traders

The panel’s central policy concern was not an absence of all tax rules, but whether parts of the framework reflect how digital assets are traded. Vandana Ahuja of EY India said there had been greater clarity on taxation, while noting that the 1 per cent tax deducted at source, or TDS, could weigh particularly on frequent traders. In some cases, she said, the amount deducted on transactions may be disproportionate to the profits earned.

That distinction matters because a transaction-linked deduction can affect a trader even when the eventual profit is limited. As an implication, frequent trading may tie up more funds through deductions than a measure based only on profitable outcomes would. The panel did not propose a replacement framework, but Ahuja said the industry should take its concerns to the government.

At the same time, tax authorities are gaining access to more transaction information through data-sharing arrangements and exchanges of information with other countries. That creates a two-sided policy challenge: industry participants want rules suited to the activity, while regulators have a growing ability to monitor transactions. Clearer regulation would need to address both compliance and the practical concerns raised by market participants.

Investor priorities increasingly include safety and privacy

The executives described demand that is no longer confined to large cities or short-term trading. BitDelta India chief executive Vikaas Sachdeva said interest was coming from smaller cities as well as urban centres, with users exploring digital assets as investments. He cautioned against using headline adoption figures alone to judge the market.

More revealing, he said, are the questions users now ask: whether their money is safe, whether assets are segregated and how personal information is protected. These concerns suggest that trust and risk management are becoming more important to the customer experience. For platforms, that may mean investor education and clear communication about risks matter alongside making onboarding straightforward.

Binance’s SB Seker said policy discussions had changed little despite the country’s substantial digital-asset user base, and argued that market demand was moving ahead of those discussions. He also pointed to technology tools exchanges are developing to help address fraud prevention and transparency. Such tools may support oversight, but the panel’s comments do not resolve the broader question of how regulation will be designed.

Tokenisation could take the market beyond trading

The discussion also looked beyond conventional virtual digital assets to tokenisation: using blockchain technology to represent assets digitally. CoinSwitch co-founder Vimal Sagar Tiwari described it as a way to make real-world assets programmable and potentially create new routes to financial products. He said broader real-world applications were yet to arrive, while pointing to significant potential.

For the industry, this could widen the conversation from exchange activity to the rules and safeguards needed for new digital-asset products. But potential use cases are not the same as established adoption. Tiwari and Sachdeva both highlighted emerging products, while the panel also stressed that innovation must develop alongside customer protection and education. Whether tokenisation becomes commercially meaningful will depend on how those products are built and how users’ risks are explained.

Key Highlights

• EY India’s Vandana Ahuja said the 1 per cent TDS can be burdensome for frequent traders, particularly when deductions are disproportionate to profits.
• Industry participants called for greater regulatory clarity as digital-asset demand develops.
• Investor questions increasingly include asset safety, segregation and personal-data protection.
• Panel members said digital-asset interest extends beyond major urban centres and short-term trading.
• Tokenisation was discussed as a potential blockchain use case, though broader real-world applications are still to emerge.

Investor Note: The discussion highlights policy and trust issues, not a settled regulatory outcome or a guarantee of future returns. Investors should assess the risks of digital assets and the safeguards offered by a platform, while recognising that the tax and regulatory questions raised by the panel remain unresolved.