Crypto Industry Sets High Hopes for Union Budget 2026
India's virtual digital assets sector eagerly anticipates the upcoming Union Budget 2026. Stakeholders across the cryptocurrency landscape have outlined clear expectations from the central government. They seek regulatory clarity, refined taxation policies, and a comprehensive framework for digital assets.
Budget Timeline and Industry Significance
Union Finance Minister Nirmala Sitharaman will present the Union Budget 2026 on Sunday, 1 February. The Budget session in Parliament begins on 28 January 2026 and continues until 2 April 2026. This budget holds particular importance for India's rapidly growing digital asset economy.
Abhay Agarwal, Founder of Getbit, reveals a staggering statistic. India currently boasts over 100 million cryptocurrency users. This makes it the world's fastest-growing user base. The combination of this expanding user base and evolving regulations has created an active digital asset economy. This economy already outpaces growth rates in many other countries.
SB Seker, Head of APAC at Binance, observes India's swift adoption of blockchain and virtual digital assets. He notes this reflects both the scale of its digital economy and increasing retail participation. Seker believes the budget offers a crucial opportunity. It can strengthen the VDA ecosystem, refine tax structures, and support responsible market development.
Understanding Virtual Digital Assets
What exactly are virtual digital assets? According to Tax Guru, a VDA is a digitally represented code or token. It is exchanged for value or carries a promise of inherent value. It functions as a unit in financial transactions or investments. Users can transfer, store, or trade it electronically.
This definition encompasses cryptocurrencies like Bitcoin. It also includes other digital assets such as non-fungible tokens (NFTs). PricewaterhouseCoopers (PwC) provides a broad interpretation. They define VDAs to include any information, code, number, or token generated through cryptographic means. This excludes Indian or foreign currency.
Current Taxation Framework for VDAs
A PwC overview details India's current taxation framework for virtual digital assets. Key provisions include:
- Income from transferring VDAs faces a 30% tax rate, plus surcharge and cess. This rule took effect on 1 April 2022.
- Taxpayers cannot deduct any expenditure or allowance against this income.
- Losses from VDA transfers are not eligible for set-off against other income. They also cannot be carried forward.
- When gifting VDAs, the recipient bears the tax liability.
- Section 194S, effective from 1 July 2022, mandates a 1% TDS. This applies when paying any resident for transferring a VDA.
Stakeholder Expectations for Budget 2026
Regulatory Clarity Tops the List
Nischal Shetty, Founder of WazirX, emphasizes the budget's potential. He sees a clear opportunity to fine-tune a framework that supports transparency and compliance while fostering innovation. Shetty argues this framework needs reconsideration, aligning with Web3's global maturation over recent years.
Raj Karkara, COO of ZebPay, agrees. He states a clear and consistent framework for digital assets would strengthen trust among investors, institutions, and market participants. It would enable businesses to operate responsibly within well-defined boundaries.
Shetty adds that such clarity could propel the cryptocurrency industry. It might help India achieve its $5 trillion economy target. Clear guidelines on permissible activities, compliance standards, and reporting obligations would strengthen investor confidence. He references the latest FIU guidelines for exchanges operating in India as a positive step.
Demand for Tax Framework Overhaul
Industry leaders unanimously call for tax reforms. Shetty suggests a calibrated reduction in transaction-level TDS. He also recommends reviewing loss set-off provisions. These changes could restore onshore liquidity, improve compliance, and keep more economic activity within India's regulated perimeter without compromising oversight.
Karkara endorses this from a taxation standpoint. He advocates rationalizing the current 1% TDS on crypto transactions. This could meaningfully improve liquidity and encourage stronger onshore participation. He also calls for a review of the flat 30% tax on VDA gains. Aligning it with other asset classes and allowing loss set-offs would create a more balanced and predictable investment environment.
Ashish Singhal, Co-founder of CoinSwitch; Edul Patel, CEO of Mudrex; and Sumit Gupta, co-founder at CoinDCX, echo this sentiment. Their overwhelming expectations include:
- Reduction in TDS on VDA transactions from 1%.
- Raising the TDS threshold to ₹5 lakh.
- Review of the flat 30% tax on VDA gains.
- Allowance of offset for loss from VDA transactions.
- Aligning capital gains taxation with income slabs.
- A dedicated Crypto Bill in India.
- Alignment of SEBI guidelines for companies holding BTC on their balance sheets.
Singhal points out the current framework's challenges for retail participants. It taxes transactions without recognizing losses, creating friction rather than fairness. He argues raising the TDS threshold to ₹5 lakh would protect small investors from disproportionate impact. Patel adds that reducing TDS and allowing loss offsetting would encourage responsible participation. It would support a transparent and sustainable crypto ecosystem in India.
Push for Innovation and Global Participation
Karkara notes Budget 2026 could unlock new lines of innovation-led businesses. It would enable India's vibrant Web3 ecosystem and deep pool of developers and technology talent to be utilized more effectively and scaled more responsibly. He believes a well-defined regulatory framework would allow India to participate more actively in the global crypto economy.
He adds that the upcoming Economic Survey will be keenly observed. It could offer early signals on policy thinking around digital assets. This would help set a constructive tone for the Budget, paving the way for a transparent and sustainably growing digital asset ecosystem in India.
Binance's Seker expects clear, consistent operating standards for VDA platforms. These should align with India's AML/KYC and investor protection priorities. Such standards will encourage responsible capital investment, create skilled jobs, and build domestic capabilities.
Singhal states any revisions for the sector in this Budget present a great opportunity. They can benefit both investors and the government. He remains hopeful the government will recognize this gap and consider reviewing the current framework soon.
Gupta concurs, emphasizing the sector seeks not deregulation, but clarity and fairness. He calls for uniform enforcement of taxation and compliance norms across all crypto exchanges. This includes offshore platforms catering to Indian users. Clear rules on taxation, loss treatment, and business deductions will prevent activity from going underground and improve transparency. With consistent policy and strong enforcement under FIU and PMLA norms, India can retain talent, curb illicit activity, and build a compliant, innovation-driven digital assets ecosystem.
