India Keeps Crypto Tax Provisions in New Budget

“The onus of deducting TDS has been on crypto exchanges or on the user (if using P2P or other means), but until now there was no penalty for non-deduction,” CoinSwitch’s CEO said

article-image

Central Secretariat, New Delhi, India; Source: Shutterstock / Alex Waltner Photography, modified by Blockworks

share

India announced its annual budget for the year 2023-24 on Wednesday, introducing a penalty for individuals that avoid paying taxes on cryptoassets.

The budget, which details the government’s fiscal roadmap for the upcoming year, set out several priorities covering infrastructure and investment, green growth, youth power and the financial sector.

“The Union Budget 2023 has unveiled several new policies and initiatives designed to foster growth through digital transformation. It’s great to see the financial sector as one of the seven priority sectors in the budget,” Ashish Singhal, CEO at CoinSwitch, said in a statement. 

Anticipating the upcoming budget, several Indian-origin CEOs and investors had hoped the budget would bring in a deduction in crypto-related tax, but policymakers didn’t oblige. India had established a crypto tax slab effective July 2022, requiring investors to pay a 1% tax deducted at source (TDS), on top of a flat 30% tax on crypto profits, on the transfer of virtual digital assets. 

“A reduction in 1% TDS to 0.01% would have helped the millions of traders in India,” WazirX CEO Nischal Shetty said on Twitter, and indicated that he expects the country to wait until global regulations are clearer. 

Meanwhile, Singhal noted that although the TDS of 1% for crypto transactions remains as it was, a clarification should be made.

“The onus of deducting TDS has been on crypto exchanges or on the user (if using P2P or other means), but until now there was no penalty for non-deduction,” he said.

“This is to say, don’t try to avoid TDS by using offshore or non-compliant platforms. You may be penalized as per Section 271C of the Income Tax Act. If you are investing in crypto, use a tax-compliant platform.”

The government doesn’t mention cryptocurrencies specifically in its Income Tax Act, but refers to them as “virtual digital assets.” 

Notably, the budget has introduced a penalty for offenders or platforms that don’t pay up TDS on VDAs through an amendment to Section 271C of the Income Tax Act.

From April 1, people failing to pay up TDS could be fined in the amount of the liability or get jail terms of between 3 months to 7 years.


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Research Report Templates.png

Research

Maple Finance has successfully navigated significant market challenges through its strategic pivot to secured lending (Maple v2) and the launch of its Syrup product. Syrup has become a primary growth driver, delivering sustainable, outperforming stablecoin yields and rapidly increasing TVL. The upcoming custody-first Bitcoin staking product (istBTC) presents another significant avenue for expansion. Crucially, Maple has achieved operational profitability, a key inflection point that, combined with a fully vested token and active buyback mechanism, strengthens its investment case. While valuation metrics suggest potential undervaluation relative to peers and growth, the primary forward-looking risk identified is the long-term sustainability of its current high-take-rate collateral staking revenue model.

article-image

Funds disagree about which metrics matter, but agree fundamentals are key

article-image

PGP creator Phil Zimmermann’s connection with Bitcoin is complicated

article-image

Blockworks spoke with a dozen current and former employees about the problems that have plagued Bitget’s blockchain, Morph

article-image

Perpl, a perps DEX, plans to launch testnet by the end of this year

article-image

A recent Citi report predicted that stablecoin AUM could hit $3.7 trillion by 2030, largely because of institutional adoption

article-image

The startup hopes to reduce crypto’s reliance on AWS and Google Cloud