Union Finance Minister Nirmala Sitharaman's Budget 2025 failed to address the concerns raised by the crypto industry in India at a time when the emerging industry is gaining widespread recognition in many advanced economies like the US, say the industry stakeholders. The key areas of discontent for the virtual digital asset industry are lack of tax relief, no steps to curtail migration of investors to offshore exchanges, no parity between domestic and offshore players, and increased compliance burden.

The industry feels that despite 2024 being a year of significant growth, marked by Bitcoin surpassing $100K and a surge in institutional investment, the government has shied away from introducing progressive measures to impact the industry positively. Though India continues to host one of the largest crypto investors, the 30% tax on closure profits and 1% TDS on transactions have hampered its growth.

Reacting to the Indian Union Budget 2025-26 and its impact on the VDA sector, Bharat Web3 Association Chairperson Dilip Chenoy says though the BWA acknowledges the government’s focus on digital transformation and its efforts to enhance regulatory clarity in the Web3 sector, it is disappointed about no changes in taxation. "The BWA supports the proposed amendments on reporting obligations for VDAs, which underscore the importance of transparency and compliance in the ecosystem. However, we are disappointed there have been no changes in the taxation framework for VDAs, despite providing data-backed justifications highlighting its impact on the industry's growth and investor participation."

Other members of the Web3 Association and players of the crypto industry echo Chenoy's views. Sumit Gupta, Founder, CoinDCX, agrees that unfortunately, "there is no relief" to the crypto industry in the Budget 2025. "We were hoping for some amendments to create parity between tax-compliant VASPs and non-compliant offshore exchanges. Despite providing the government with ample justification regarding the ambiguity in the language of the current TDS Section 194S, the concerns around Indian wealth being shifted offshore and the significant loss to the tax exchequer have been overlooked."

Retrospective Taxation

Budget 2025: Crypto industry 'disappointed', warns high taxes, offshore migration hurting growth