India’s cryptocurrency community faced another blow this week as the Ministry of Finance confirmed it has no plans to revise existing crypto tax rules. The statement, released in Parliament, also clarified that there are no intentions to permit Bitcoin ETF India products or similar crypto-linked financial instruments. This development has dashed hopes of a policy shift that many investors and startups had been eagerly awaiting.
Despite growing momentum worldwide in crypto finance, especially with the approval of multiple Bitcoin ETFs in the US, India has continued to be careful. The Government does not seem willing to change its stance on using strict taxation and regulation. While there is a push from retail and institutional investors for some sort of latter-day reform, New Delhi appears to be of the mind of just making it watched and risk controlled in the digital asset/crypto space.
No Change in Crypto Tax Policy Frustrates Investors
The 30% flat tax on crypto profits, introduced in 2022, remains unchanged. In addition, the 1% TDS on all crypto trades still applies. These crypto tax rules have been a major deterrent to traders and have drastically reduced volumes on Indian exchanges. Stakeholders hoped for relief in the 2025 Budget, but the Ministry’s statement dismissed those expectations outright.
Crypto firms operating in India say these taxes make it unviable to compete with global platforms. Several startups have already moved operations to friendlier jurisdictions. However, the Finance Ministry insists that taxes are necessary to track transactions and curb misuse.
Bitcoin ETFs Not Coming to Indian Markets Anytime Soon
Another major disappointment for the crypto community is the government’s refusal to allow Bitcoin ETF India products. Globally, ETFs are seen as a way to legitimize cryptocurrency and provide safer access for institutional investors. Yet, India says it will not entertain proposals for crypto ETFs at this time.
This position leaves Indian investors unable to access structured, regulated crypto exposure through domestic stock exchanges. While U.S. and European investors benefit from regulated Bitcoin investment products, Indian users still face restrictions.
Global Trends Push Forward While India Holds Back
As countries like the U.S., Hong Kong, and even the UAE continue to take strides in innovative regulation of cryptocurrency, India’s position appears more alone than ever. These countries have reduced taxes, regulated ETFs, and developed licensing regimes to bolster growth while adhering to regulatory compliance.
Yet, the government in India warns that “this sector is high-risk”. Authority’s concerns focus on issues of fraud, money-laundering, and investor protection. India tends to favour waiting for ‘building a global consensus’ at as forums such as G20, before making any major moves.
What This Means for the Indian Crypto Ecosystem
The Finance Ministry’s most recent statement reiterates the ongoing restrictive conditions related to digital assets. Without changes in crypto tax rules, many Indian investors may continue to use offshore platforms or move overseas to operate their business.
Uncertainty on the regulatory environment and excessive compliance burdens are restricting the development of innovation outside of India. While India-born talent is building on international Web3 platforms, the hostile local regulatory environment is more significant. If India delays reforms for too long, this gap could increase.
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