The Indian crypto scene has been buzzing with one big question for a while now. After years of dealing with some of the toughest tax rules around, many wonder if bringing in SEBI for clearer oversight might finally open the door to friendlier adjustments. Right now, the combination of that flat 30 percent on profits, the 1 percent TDS on transactions, and no way to offset losses continues to frustrate traders and holders alike.
It’s not just talk in small circles. Local exchanges and industry groups have been actively pushing the government, especially ahead of recent budgets, to make meaningful changes. Their main ask includes slashing that TDS rate way down to something like 0.01 percent to bring liquidity back home.
The Offshore Shift That’s Hard to Ignore
One of the clearest signs of strain shows up in the numbers. Roughly 60 to 90 percent of Indian crypto trading activity has moved to offshore platforms in recent years, representing around 6 billion dollars annually in volume that could have stayed domestic.
This migration hurts local exchanges, reduces government tax collections compared to potential, and leaves a lot of activity outside proper oversight. Many users turn to foreign sites via VPNs because the effective costs and friction at home feel too high for active trading.
Domestic platforms find themselves in a tough spot. They comply fully with the rules but watch business flow elsewhere, which is why they’ve ramped up lobbying efforts hard.
Hopes Tied to SEBI and Broader Regulation
Talk of SEBI stepping in more directly has raised expectations. As the securities regulator, its involvement could bring structured rules similar to stocks, potentially including better investor protections and clearer frameworks for different assets.
Some see this as a chance to align crypto more closely with traditional markets, which might pave the way for tax tweaks down the line. The community hopes that proper regulatory recognition could soften the current speculative label that justifies the heavy rates.
However, the latest Union Budget in 2026 left the core taxes unchanged despite all the pressure. No reduction in TDS, no loss set-offs introduced. That left many disappointed, though it did come with tighter compliance measures like new penalties for reporting lapses.
What Local Exchanges Are Fighting For
Indian platforms aren’t staying quiet. They’re urging authorities to lower the TDS burden significantly to 0.01 percent, raise thresholds for smaller investors, and allow some flexibility with losses. These steps, they argue, would boost transparency, keep more capital circulating locally, and support innovation without losing revenue entirely.
The lobbying continues because everyone understands the stakes. Bringing volume back onshore would mean better tracking, more formal economic activity, and potentially stronger collections over time as participation grows.
Where Things Stand for Everyday Users
For regular traders and long-term holders, the situation creates a mixed bag. Those who buy and hold through the ups and downs feel the 30 percent hit only on exit, but active participants notice the TDS draining cash flow on every move. The lack of loss offsets makes volatile periods even tougher to manage.
This has pushed some to reduce activity or explore alternatives, while others stick it out hoping policy will catch up with the reality of a global asset class.
Many in the community remain optimistic that ongoing regulatory discussions involving SEBI, the Finance Ministry, and others could lead to gradual improvements. It’s a slow process, but persistent advocacy keeps the conversation alive.
The coming months and future budgets will be key. If SEBI’s role expands and brings more legitimacy to the sector, it might encourage the kind of balanced reforms that keep India competitive in digital assets rather than watching talent and capital head abroad.
In the meantime, staying compliant and informed remains essential. The crypto crowd here has shown remarkable resilience, continuing to engage despite the hurdles. Whether taxes ease meaningfully or not, the push for smarter policy isn’t fading anytime soon.
