India is reevaluating its approach to cryptocurrency in response to shifting global dynamics. The reconsideration comes amidst the growing popularity of digital assets around the world.
Countries like the US are leading the way by establishing a "digital asset stockpile," while Japan, Switzerland, and Russia are also exploring the integration of Bitcoin into their financial systems. Vancouver has already given the green light for Bitcoin to be included in its municipal reserves.
India's Economic Affairs Secretary, Ajay Seth, stressed the importance of considering international perspectives on cryptocurrency regulation, noting that these assets transcend national boundaries. As a result, the release of India's anticipated discussion paper on crypto regulations, originally slated for September 2024, may be further delayed due to ongoing deliberations.
Despite the regulatory review, India's latest Union Budget for 2025 did not offer any relief in terms of crypto taxes. The tax regime includes a 30% tax on capital gains and a 1% Tax Deducted at Source (TDS) on transactions. Additionally, Finance Minister Nirmala Sitharaman has proposed the inclusion of "virtual digital assets" under Section 158B of the Income Tax Act.
The move aims to enhance transparency in crypto transactions and ensure compliance with tax regulations. Notably, India has traditionally taken a cautious stance toward cryptocurrencies, with efforts focused on exploring a Central Bank Digital Currency (CBDC) as an alternative to decentralized digital assets.
In recent developments, Indian cryptocurrency exchanges have faced regulatory challenges and tax-related issues. Authorities uncovered significant GST liabilities from exchanges, with Binance alone owing $85 million in unpaid taxes. The regulatory environment in India has prompted platforms like Bybit to temporarily suspend operations due to compliance concerns.
The global landscape of cryptocurrency continues to evolve, with different countries responding in diverse ways to the rise of digital assets. As India reconsiders its regulatory approach, the future of crypto in the country remains uncertain amid ongoing discussions and tax enforcement measures.