Budget 2026: Virtual digital assets sector expects regulatory clarity, taxation policy, crypto framework in India

Budget 2026 expectations: From regulatory clarity to clear taxation policy, and cryptocurrency framework, stakeholders in the virtual digital assets (VDAs) sector in India have high expectations from the central government's upcoming Budget.

Union Finance Minister Nirmala Sitharaman is expected to present the Union Budget 2026 on Sunday (1 February), with the Budget session in Parliament set to commence on 28 January 2026 and continue till 2 April 2026.

According to Abhay Agarwal, Founder of Getbit, India currently has over 100 million (10 crore) crypto users, making it the fastest growing user base in the world. This growing user base, combined with increased regulation and policy clarity around crypto, has produced an active digital asset economy that is already growing faster than other countries around the world.

Further, SB Seker, Head of APAC at Binance noted that India’s rapid adoption of blockchain and VDA reflects both the scale of its digital economy and growing participation by retail users. Here, he feels the budget presents an opportunity to strengthen the VDA ecosystem, refine taxes, and support responsible market development.

What are Virtual Digital Assets?

A digitally represented code or token exchanged for value or with promise of inherent value, or a unit that functions in financial transaction or investment that can be transferred, stored or traded electronically is considered a virtual digital asset or VDA, according to Tax Guru. This includes cryptocurrencies such as Bitcoin, and other digital assets such as non-fungible tokens (NFTs).

PricewaterhouseCoopers (PwC) defined VDAs in a “wide manner to, inter-alia, include any information, code, number or token not being Indian or foreign currency, and generated through cryptographic means or others”.

What is the current taxation framework for VDAs?

According to a PwC overview of taxation framework of VDAs in India:

• Effective from 1 April 2022 onwards, any income from transfer of VDAs is taxable at the rate of 30% (plus surcharge and cess).
• Effective from 1 April 2022 onwards, any income from transfer of VDAs is taxable at the rate of 30% (plus surcharge and cess).
• There is no deduction with respect to any expenditure or allowance
• Loss from transfer of VDAs is neither eligible to be set off against any income nor permitted to be carried forward.
• In the event of gifting of VDAs, the tax payment would be made by the recipient.
• From 1 July 2022, section 194S was inserted for the purpose of withholding. This places an obligation on a person to ensure that tax is withheld at the rate of 1% at the time of payment/credit of any sum to any resident as consideration for the transfer of a VDA.

What do stakeholders expect for VDAs from Union Budget 2026?

Regulatory clarity high on list

According to Nischal Shetty, Founder of WazirX, Budget 2026 presents a clear opportunity to “finetune a framework which supports transparency and compliance while fostering innovation” and needs to be reconsidered in lines of how Web3 has matured over the last couple of years globally.

Raj Karkara, COO of ZebPay concurred that “a clear and consistent framework for digital assets would help strengthen trust among investors, institutions, and market participants, while enabling business to operate responsibly within well-defined boundaries”.

Shetty added that there is need for clarity that could push the cryptocurrency industry and help India achieve the $5 trillion economy target. “Clear guidelines on permissible activities, compliance standards, and reporting obligations, such as the latest guidelines issued by FIU for exchanges operating in India, will strengthen investor confidence and help build a sustainable digital asset ecosystem,” he feels.

Does tax framework need a rework?

According to Shetty, a calibrated reduction in transaction-level TDS and a review of loss set-off provisions “could help restore onshore liquidity, improve compliance, and ensure that more economic activity remains within India’s regulated perimeter, without compromising oversight or enforcement”.

From a taxation standpoint, Karkara endorsed, “a rationalisation of the current 1% TDS on crypto transactions could meaningfully improve liquidity and encourage stronger onshore participation, while a review of the flat 30% tax on VDA gains, aligned with other asset classes and allowing for loss set-offs, would create a more balanced and predictable investment environment.”

The same sentiment was repeated by Ashish Singhal, Co-founder of CoinSwitch; Edul Patel, CEO of Mudrex; and Sumit Gupta, co-founder at CoinDCX.

Overwhelmingly, expectations included recommendations for:

• Reduction in TDS on VDA transactions from 1%
• Raising the TDS threshold to ₹5 lakh
• Review of the flat 30% tax on VDA gains
• Allowance of offset for loss from VDA transactions
• Aligning capital gains taxation with income slabs
• A dedicated Crypto Bill in India
• Alignment of SEBI guidelines for companies that hold BTC on their balance sheets

Singhal said the current tax framework presents challenges for retail participants as it taxes transactions without recognising losses and thus creates friction rather than fairness. “Raising the TDS threshold to ₹5 lakh would help protect small investors from disproportionate impact,” he added.

Patel added that reducing TDS and allowing loss offsetting would “encourage responsible participation, and support a transparent, and sustainable crypto ecosystem in India”.

Industry looks for innovation, global participation push

Karkara noted that Budget 2026 could “unlock new lines of innovation-led businesses, enabling India’s vibrant Web3 ecosystem and deep pool of developers and technology talent to be utilised more effectively and scaled more responsibly”. He also felt that a well-defined regulatory framework would allow India to participate more actively in the global crypto economy.

“The upcoming Economic Survey will be keenly observed, as it could offer early signals on policy thinking around digital assets and help set a constructive tone for the Budget, paving the way for a transparent and sustainably growing digital asset ecosystem in India,” he added.

Binance's Seker expects that, “clear, consistent operating standards for VDA platforms, aligned with India’s AML/KYC and investor protection priorities”, will encourage responsible capital investment, create skilled jobs, and build domestic capabilities.

Singhal added any revisions for the sector in this Budget presents a great opportunity to benefit both investors and the government. “We remain hopeful that the government will recognise this gap and consider reviewing the current framework soon,” he added.

Gupta concurred, “What the sector seeks is not deregulation, but clarity and fairness. There must be uniform enforcement of taxation and compliance norms across all crypto exchanges, including offshore platforms catering to Indian users. Clear rules on taxation, loss treatment, and business deductions will prevent activity from going underground and improve transparency. With consistent policy and strong enforcement under FIU and PMLA norms, India can retain talent, curb illicit activity, and build a compliant, innovation-driven digital assets ecosystem.”