The Bharat Web3 Association has asked the Indian government to reform cryptocurrency taxation ahead of the 2026 Union Budget. The industry group raised concerns about high taxes, limited access to banking, and regulatory uncertainty.
The appeal was made during a pre-budget discussion organized by the Egrow Foundation. Industry leaders warned that existing policies are limiting growth in India’s Web3 sector.
Association Raises Concerns at Pre-Budget Discussion
Since 2022, gains from crypto assets have been taxed at 30%, while a 1% tax is deducted at source for every transaction.
During the consultation, association Chairperson Dilip Chenoy presented the industry’s concerns, focusing on taxation, banking access, and regulatory clarity for virtual digital assets. He said current policies have created operational challenges for Web3 firms and reduced onshore participation.
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The group also argued that transaction-based taxes have increased costs for traders and reduced liquidity. Subsequently, the association urged policymakers to lower the TDS rate, allow losses to be offset against gains, and align crypto taxation with other asset classes.
Industry representatives said such changes would improve compliance while keeping trading activity within the domestic financial system.
Banking Access Remains a Major Challenge
Beyond taxation, the association highlighted persistent issues with banking access for Web3 companies. Despite crypto trading being legal, many firms face delays in opening accounts or experience sudden service withdrawals.
The association noted that unstable banking access disrupts day-to-day operations, including payroll processing and customer transactions. It also limits the ability of Indian startups to attract international partners and investment.
In addition, industry leaders said clearer guidelines for banks could reduce uncertainty without weakening regulatory oversight. They stressed that predictable banking access is necessary for legitimate businesses to operate effectively.
Push for Regulatory Framework and Sandbox
A lack of comprehensive regulation continues to create uncertainty for India’s Web3 sector. While authorities have acknowledged the importance of digital assets, no unified framework defines their legal treatment or oversight.
The Bharat Web3 Association called for clear rules that distinguish speculative trading from enterprise blockchain use, decentralized applications, and infrastructure development. It also recommended setting up a national regulatory sandbox for AI, Web3, and other emerging technologies, with time-bound approvals.
Industry Voices Echo Concerns
Industry participants also shared similar views publicly. Sujal Jethwani noted that India has more than 93 million crypto users but still lacks a clear policy framework.
He pointed to the impact of the 30% tax and 1% TDS on market participation and cited income tax data showing rising TDS collections from crypto activity over the past three fiscal years.
Aditya Singh echoed these concerns, calling for changes to India’s approach to Bitcoin and Web3 development. He also highlighted the impact of additional indirect taxes, including an 18% goods and services tax, on crypto-related services.
Budget Seen as Key Opportunity
Industry observers view the 2026 Union Budget as a chance for incremental reform. While major legislation may not be introduced, tax adjustments and policy signals could influence market activity.
India has more than 93 million crypto users, the largest base globally. However, industry estimates suggest a growing share of trading has moved to offshore platforms due to high taxes.
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The finance ministry has not announced any crypto-specific measures for the upcoming budget. Still, engagement with industry groups signals openness to stakeholder input as India balances innovation with financial oversight.
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