Summary of this article
66% of crypto investors find India’s tax regime unfair.
Majority want lower taxes, loss set-off, and clear regulations.
61% prefer crypto taxed like equities or mutual funds.
With the Union Budget approaching, crypto taxation has come back into focus again. A recent survey by CoinSwitch has revealed that a majority of crypto users, around 66 per cent of those surveyed, view India’s prevailing crypto structure as unfair. The survey, conducted across India with nearly 5,000 respondents, showed that 88 per cent of respondents were aware of the country’s crypto taxation rules, including the 30 per cent tax on gains in crypto assets, 1 per cent deduction of tax at source (TDS) on crypto transactions, as well as the absence of loss set-off or carry-forward provisions.
Majority Consider India’s Crypto Tax Structure Unfair
According to the findings, only about 25 per cent of respondents believed that India’s crypto taxation was fair. The survey also showed that taxation had reduced market participation with 59 per cent reporting reduced crypto investing or trading due to the current tax regime. In contrast, 17 per cent indicated increased participation, and 16 per cent said taxation had no impact on their activity.
In terms of expectations from the upcoming Union Budget, 48 per cent of respondents said they wanted a lower overall tax rate compared to the existing 30 per cent tax, while 18 per cent wanted the ability to set-off and carry forward losses. Around 16 per cent of respondents wanted a reduction in the 1 per cent TDS owing to liquidity challenges, while 10 per cent said they were looking for clearer regulatory and compliance norms. Only 2 per cent of respondents felt no changes were necessary in India’s crypto taxation structure.
61 Per cent Want Crypto Taxation Mutual Funds
When asked about how crypto should be taxed, a majority of respondents, 61 per cent, indicated that it should be treated similarly to equities or mutual funds, including comparable rates and provisions for loss adjustment. In contrast, 17 per cent preferred a separate tax framework for crypto, while 11 per cent supported stricter taxation.
According to the survey, investors emphasise the need for well-defined regulations on taxation of crypto assets, with over 80 per cent rating it as an important factor. Of these, 60 per cent considered regulatory clarity crucial, suggesting that reforms in taxation by themselves may not fully strengthen investor confidence.
The survey revealed that respondents relied on a variety of sources to stay updated on crypto and taxation. Crypto platforms and exchanges were the most used at 30 per cent, followed by news media at 27 per cent and social media at 25 per cent which highlight the importance of reliable and consistent information.
A noticeable 51 per cent of respondents were of the opinion that crypto should be encouraged as a new asset class in India. At the same time, 30 per cent supported a cautious regulatory approach while 7 per cent of respondents said that crypto should be actively discouraged.
