Budget 2026-27: Tax Relief for Crypto and Digital Assets Expected to Boost Transactions

• The Finance Act, 2022, brought cryptocurrencies and other digital assets (VDAs) under the tax net, with profits taxed at a flat 30% without deductions or loss carry-forward.
• Despite stringent rules, cryptocurrency transactions in FY25 exceeded ₹51,000 crore, leading to ₹511.8 crore in TDS collection, highlighting VDAs' significance in India's financial market.
• Strict tax rules and regulatory uncertainty are driving VDA trading volumes to foreign exchanges, prompting calls for rationalization in the upcoming Union Budget 2026.
• Key areas for reform include reviewing the tax regime (reducing TDS, allowing loss set-off, lowering tax rates), clarifying profit categorization (capital asset vs. stock-in-trade), and defining cost of acquisition and gifted VDA valuation.
• India is committed to implementing the OECD's Crypto-Asset Reporting Framework by 2027, making the Union Budget 2026 a crucial opportunity to align domestic tax policies with global transparency standards.

Why It Matters: Union Budget 2026 is a critical opportunity to rationalize VDA tax rules, boost domestic transactions, and align with global standards.