Budget 2026: Crypto Industry Experts Weigh In On Key VDA Policy Expectations Ahead of Budget 2026

Virtual digital assets (VDAs) are digital forms of value that include cryptocurrencies and other Blockchain-based assets, which have rapidly grown in popularity in India over the last couple of years. As the Union Budget 2026 is just a week away, February 1, 2026, investors and industry participants are looking forward to greater clarification on taxation, compliance, and rules governing such virtual assets.

Current VDA Tax Rules for Crypto Assets in India

Crypto assets were brought under the VDA category in Union Budget 2022 with the tax framework put into effect from April 1, 2022. Under the current rules, income from the transfer of VDAs is taxed at a flat 30 per cent. Losses from VDA transactions cannot be set off against any other income, nor can they be carried forward to future years. In addition, there is also a 1 per cent deduction of tax at source (TDS) on payments for VDA transfers on each transaction.

Experts from the crypto industry say that while the current tax framework has brought crypto and other VDAs into the tax-fold, there is, however, scope for further innovation and transparency.

Says Vikas Gupta, country manager – India, Bybit, a crypto exchange: “India’s current taxation and compliance framework has successfully established oversight and accountability in the crypto sector. But there is an opportunity to further evolve these rules to support domestic innovation and localisation, while ensuring the sector continues to operate transparently.”

Adds Sumit Gupta, co-founder at Coindcx, a crypto exchange platform: “Though the current taxation framework has reduced trading volumes and liquidity on Indian crypto platforms, this friction pushed an estimated five million users offshore, with over Rs 10 lakh crore traded on overseas exchanges, leaving users exposed to higher risks on platforms operating outside Indian know-your-customer (KYC) and anti-money laundering (AML) frameworks.”

Expert Views on Budget 2026 Expectations for VDAs

As the Union Budget 2026 approaches, experts have weighed in on potential changes to VDA regulations and taxation.

Edul Patel, CEO of Mudrex, a crypto exchange, says: “Lowering TDS from 1 per cent to 0.1 per cent could ease participation for retail investors, boost liquidity on Indian exchanges, and encourage trading within regulated platforms, while still allowing the government to track transactions effectively.”

Sumit says that aligning crypto gains taxation with existing income tax slabs, instead of the current flat 30 per cent rate, would restore tax equity. He adds that allowing loss offsetting and standard business deductions for Web 3.0 ventures could further support legitimate innovation.

Vikas shares a similar view. He says: “A calibrated review of the tax on gains and a rationalisation of the 1 per cent TDS, possibly lowering it to 0.1 per cent, could improve market efficiency. This would ease liquidity challenges, encourage more participation, and maintain transparency.”

On Web 3.0’s potential in India, Patel noted that despite the country contributing nearly 17 per cent of the global Web 3.0 workforce, much of this talent is working on overseas projects. A more balanced policy could help retain talent and strengthen India’s position as a hub for Web 3.0 innovation