Exclusive: Indian Crypto Investors Disheartened by 30% Tax & UPI Disabling
Indian cryptocurrency investors are expressing significant dissatisfaction with the current regulatory environment, specifically the crippling 30% tax on crypto gains and the subsequent disabling of UPI (Unified Payments Interface) for crypto transactions by several platforms. This situation, stemming from concerns around digital assets, has led to a significant downturn in trading volumes and overall market sentiment.
Section 115BBH of the Income Tax Act, 2025 mandated a flat tax rate of 30% on the transfer of Virtual Digital Assets (VDAs), including cryptocurrency with no provision for offsetting losses from one crypto asset against gains from another. This high tax rate, coupled with the 1% TDS (Tax Deducted at Source) on every transaction, makes crypto trading significantly less attractive for both retail and institutional investors.
Recently, Watcher Guru reached out to crypto investors in India to gauge their feelings about the current policies. The overwhelming response was negative. Sadly, everyone is unhappy with the 30% tax, 1% TDS, and disabling of convenient payment methods like UPI. Many are questioning the long-term viability of remaining active in the Indian crypto market under these conditions.
In India, crypto transactions are currently subject to a 30% capital gains tax and a 1% levy on every transaction out of concern from authorities that digital assets are being used for illicit activities. This heavy taxation has been criticized for stifling innovation and driving investors to explore alternative markets and decentralized platforms outside of India.
The Indian crypto industry is actively engaging with the government to advocate for more favorable tax policies. India’s crypto industry is actively lobbying for reduced taxes, citing the Trump administration's crypto-friendly measures as a precedent. They argue that a lower, more reasonable tax rate would encourage greater participation, boost tax revenue in the long run, and foster a more sustainable crypto ecosystem within the country. There are early signs that India may soon ease its harsh 30% crypto tax and 1% TDS policy, following renewed dialogue with industry leaders and shifting sentiment.
The disabling of UPI by numerous exchanges has further compounded the challenges. This has severely limited the ease with which investors can deposit and withdraw funds, adding friction to the trading process and further discouraging participation. The combined impact of the high tax rate and restricted payment options is creating a challenging environment for the Indian crypto industry, pushing many investors to re-evaluate their investment strategies and explore options outside of India.