Former MP Calls for Crypto Tax Reform and Clear Regulations

India’s crypto users continue to struggle with the high taxes and a lack of clear regulations. Former MP Ritesh Panday has once again stood up for India’s crypto community and is urging the government to cut 30% tax, remove the 1% TDS and bring in clear regulations.

Over-Regulation Could Kill India’s Web3 Potential

He explained how buying an NFT involves three steps, buying crypto, transferring it to a wallet, and making the purchase, With the current rules, 1% TDS is charged at every stage. He warned that this kind of policy creates red tape, stifles innovation, and could kill a growing, youth-driven industry.

India has the potential to lead in Web 3.0 with its many startups and unicorns. But such heavy-handed regulation is choking innovation before it has a chance to grow.

India’s Crypto Tax Burden Keeps Growing

India doesn’t yet have a law to regulate crypto, but strict taxes are already in place. Indian crypto users face a steep tax burden. There is a 30% tax on any profits they make from crypto trades. Then, a 1% TDS is taken on every sell transaction, no matter the amount.

Starting July 7, 2025, things got even tougher. Bybit will start charging 18% GST on almost all crypto services, like trading, staking, withdrawals, deposits, token swaps, and more.

Heavy Taxes Driving $42B in Volume Offshore

Sumit Gupta, the CEO of CoinDCX has pointed out that the 1% TDS rule is doing more harm than good. He revealed that it has driven over 5 million Indian users to offshore platforms, shifting $42 billion in trading volume abroad between July 2022 and July 2023. As a result, the government lost an estimated $4.2 billion in revenue, while collecting only $31 million via TDS.

Many Indians are using foreign crypto platforms to trade. Indians traded Rs 2.63 lakh crore on them in just 10 months, skipping around Rs 2,600 crore in taxes. If this continues, losses could cross Rs 17,000 crore soon.

Lack of Regulation, Weak Tracking, and Rising Security Concerns

Crypto is still unregulated in India. Platforms should register under anti-money laundering laws, but many fail to comply. Besides,major security breaches at exchanges like CoinDCX and WazirX have raised serious concerns about the safety of user assets.

Besdies, india does not have a real-time system to track if people are honestly reporting their crypto income. Since crypto tax rules kicked in (FY 2022–23), the Government has collected over Rs 700 crore, but they haven’t estimated how much money might be lost due to under-reporting.

Tax officers are getting trained blockchain, digital forensics, and related areas. But experts doubt if this training is enough to keep up with the fast-moving crypto world.

COINS Act 2025: A Bold Blueprint

But efforts are underway. Hashed Emergent recently introduced the COINS Act 2025, a bold, rights-based crypto proposal. It calls for self-custody rights, tax reforms, a dedicated regulator. Although it not a law yet, but its a powerful blueprint to make India a true Web3 leader.