India’s cryptocurrency market has struggled under the weight of its harsh tax policies, raising concerns about the country’s position in the global digital economy. In 2022, the government imposed a 1% Tax Deducted at Source (TDS) on crypto transactions exceeding ₹10,000, alongside a 30% capital gains tax on crypto profits.
Harsh Regulations or Smart Governance? The Divide in India’s Crypto Policy
Officials framed these measures as necessary for regulation and financial oversight, but industry experts argue they have crippled trading activity, forcing many traders to exit the market. The impact was swift—crypto exchanges like WazirX and CoinSwitch Kuber saw trading volumes plummet by over 70%, stripping India of its once-thriving digital asset ecosystem.
In an interview, WazirX co-founder Nischal Shetty stated that the policy penalized high-frequency trading and alienated traders from the crypto market.
Related: Indian Experts Demand Crypto Tax Reduction in 2024 National Budget
Despite the visible impact of India’s tax regime on the local cryptocurrency market, government personnel and supporters of the policy have defended the regulation. They maintain that the policy aims to legitimize the crypto market within the country. According to a senior official at the Ministry of Finance, the tax helps to ensure that the digital assets ecosystem does not become a haven for illicit activities.
China’s Blockchain Boom—A Stark Contrast to India’s Crypto Crackdown
While India focuses on restricting crypto, China has taken a different path—investing in blockchain as a strategic asset. The Chinese government recently unveiled a $54.5 billion national blockchain roadmap as part of its data governance strategy. Also, unlike India, China has not completely banned crypto taxation but has opted for a capital gains tax structure, which traders consider far more business-friendly than India’s punitive TDS rules.
Related: Crypto Tax Payment Kicks Off in India for NRIs Amid Unclarity
With China accelerating blockchain adoption and India’s crypto sector shrinking under heavy regulation, the question remains: Is India positioning itself as a global leader in digital assets, or is it stifling its own potential?
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