India’s CBDT Consults Crypto Platforms on Tax Overhaul

• India engages industry stakeholders to refine virtual asset taxation policies.
• Focus includes excessive taxes, global alignment, and potential regulatory bodies.

On August 18, 2025, various media outlets reported that India’s Central Board of Direct Taxes (CBDT) has initiated discussions with cryptocurrency platforms to reassess the nation’s tax framework for virtual digital assets (VDAs). This represents a notable shift from India’s previously rigid stance on digital asset regulation.

The consultations aim to address concerns raised regarding the existing tax structure. Industry participants have criticized the 30% flat tax on crypto gains and the 1% tax deducted at source (TDS) on all transactions. Current rules also prohibit traders from offsetting losses from VDA trades against profits, a restriction that has negatively impacted market liquidity.

Such stringent regulations and accompanying uncertainty have pushed several Indian crypto businesses and traders to relocate to more accommodating jurisdictions. Dubai has emerged as a particularly popular destination in this trend, according to media reports.

To facilitate meaningful dialogue, the CBDT has distributed an extensive questionnaire to crypto industry stakeholders. The document requests input on a variety of issues, including the viability of introducing a new VDA-specific law and suggestions on which regulatory body might oversee the sector. Potential options include the Securities and Exchange Board of India (SEBI), the Reserve Bank of India (RBI), and the Financial Intelligence Unit (FIU-IND). Additionally, the survey solicits feedback on reducing the TDS rate and modifying loss-offset regulations to strike a better balance in the tax environment.

The initiative also explores integrating India’s VDA policies with global frameworks. Specifically, the CBDT is reviewing the Organisation for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF). Aligning with international standards would mark a strategic shift, signaling India’s intent to harmonize its cryptocurrency regulations with evolving global practices.

Industry insiders have expressed optimism, interpreting the consultations as a positive step towards fostering a transparent and sustainable regulatory infrastructure for cryptocurrencies in one of the largest markets worldwide.

As of August 18, 2025, 15:00 UTC, Ethereum (ETH) remains steady at $2,114 with a 3.1% uptick in 24-hour trading volume, according to CoinMarketCap.