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IND
Highlights
- High Tax Burden India imposes a 30% tax on crypto profits, with a new 70% tax on undisclosed gains.
- Crypto Market Growth Despite harsh regulations, India's crypto market reached $2.6 billion in 2024.
- Potential Policy Shift India’s review of crypto policies could align with global trends as major countries embrace digital assets.
India has had a turbulent relationship with cryptocurrency, facing regulatory challenges that have made the market highly restrictive. Since the Reserve Bank of India (RBI) began issuing warnings about the risks of digital assets in 2013, the country has taken a cautious approach toward crypto. The situation escalated in 2018 when the RBI imposed a ban on banks working with crypto businesses, severely limiting the ability of exchanges to operate. However, in 2020, the Supreme Court of India lifted the ban, allowing the crypto sector to revive.
Despite the Supreme Court's intervention, the government’s stance remained strict. A 30% tax on crypto profits was introduced, significantly increasing the cost of trading. Recently, the government has imposed an additional 70% tax on undisclosed crypto gains. This new rule means that individuals who make profits from crypto but fail to disclose their gains face heavy taxation, while losses cannot be offset to reduce tax burdens. Furthermore, transactions worth more than ₹50,000 in a year are subject to extra taxes, adding further complexity to the regulatory environment.
These stringent measures have led many to believe that the government aims to discourage the use of cryptocurrency in India. Some officials have even gone so far as to compare crypto to gambling, associating it with illegal activities. Despite these challenges, India’s crypto market has shown resilience, reaching a value of $2.6 billion in 2024, with projections suggesting it could grow to $13.9 billion by 2033, expanding at an annual rate of 18.48%.
Amid this, India has begun reviewing its crypto policy, potentially signaling a shift in approach. Economic Affairs Secretary Ajay Seth acknowledged that digital assets are not confined by borders, implying that India may be forced to adjust its stance as other nations move toward more crypto-friendly policies. The government has also been focusing on its own central bank digital currency (CBDC), with former RBI Governor Shaktikanta Das calling CBDCs "the future of currency." A pilot program for the digital rupee has already been launched, and the RBI is working on a cross-border payment system that could enable CBDCs to facilitate international transactions.
While India is still navigating its approach to cryptocurrency, the government’s focus on CBDCs suggests a willingness to engage with digital assets. However, the existing tax structure and regulations continue to hinder the growth of the crypto industry in the country. As global crypto adoption rises, India may soon have no choice but to reconsider its policies, potentially aligning with international trends to foster growth and innovation in the digital asset space.
