India’s crypto tax policy could play a larger role than new regulation in shaping local trading activity over the next year, according to Rajagopal Menon, Vice President of WazirX. He said the 30% tax on virtual digital asset gains and the 1% tax deducted at source on applicable transfers have already changed how many Indian traders use crypto platforms.
His comments come as India combines tax enforcement with closer checks on crypto service providers that serve users in the country.
India’s 30% Crypto Tax and 1% TDS Change Trading Patterns
India taxes income from the transfer of virtual digital assets at 30%, with applicable surcharge and a 4% cess. The rules allow taxpayers to deduct the cost of acquisition, but they do not allow other expenses or the set-off of VDA losses. A 1% TDS also applies to eligible VDA transfers above the stated thresholds.
Menon said these rules have changed where some users trade. Reportedly, WazirX cited an ESYA estimate showing that 30 lakh to 50 lakh Indian users moved to offshore platforms after the 1% TDS began.
Another estimate cited by the exchange placed offshore platforms’ share of Indian crypto trading volume at 91.5% between October 2024 and October 2025. These are industry estimates, not official government figures.
FIU-IND Steps Up Action Against Crypto Service Providers
India has also tightened compliance checks for crypto businesses that serve local users. On September 9, 2026, the Financial Intelligence Unit-India issued non-compliance notices to 15 virtual digital asset service providers under the Prevention of Money Laundering Act. The agency also sought the removal of their apps and website URLs from public access in India.
The FIU action covered platforms including Weex, Blofin, Bitunix, DigiFinex, Toobit, XT.com, WOO X and Pionex. Crypto service providers operating in India must register with FIU-IND and follow anti-money laundering and counter-terror financing requirements. Menon said Indian and offshore platforms serving local customers should face the same tax and reporting rules.
India Remains First in Chainalysis Crypto Adoption Ranking
Even with higher taxes and stricter compliance checks, India remains a major crypto market. Chainalysis ranked India first in its 2025 Global Crypto Adoption Index. India also ranked first across the index’s retail, centralized service, decentralized finance, and institutional categories.
Menon said the main change has been where Indians trade rather than whether demand has disappeared. He expects tax policy to remain a key factor for the market over the next year. WazirX has called for a lower TDS rate and clearer treatment of crypto losses, while also supporting reporting requirements for offshore platforms that serve Indian users.
For taxpayers, the current framework still requires reporting of VDA income in the relevant tax return schedules. Simply holding crypto does not create a taxable transfer, while selling, trading or otherwise transferring a VDA can trigger tax rules. The Income Tax Department also continues to apply the 1% TDS framework to covered VDA transfers.
Also Read: India Expands Tokenization Push as Maharashtra Eyes Public Asset Funding
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