7 months ago
India's Crypto and Stock Taxes Face Criticism
India's cryptocurrency industry and stock market participants are asking the government to change the tax rules before the Union Budget 2026.
They say the current rules, which include a 30% tax on crypto profits and a 1% tax on every transaction, are not fair and cause problems.
For example, people have to pay taxes even when they lose money, and a lot of money is taken out of their accounts before they even make a profit.
The industry wants the government to reduce the transaction tax and allow people to use their losses to offset gains.
Additionally, Zerodha's co-founder Nithin Kamath has pointed out that repeated increases in the Securities Transaction Tax (STT) on stock trades are hurting trading activity and reducing government revenue.
He believes that the recent 60% increase in STT on futures and options has led to lower trading volumes and that the government would have collected more tax without the hike.
India's crypto industry is pushing for tax reform ahead of the Union Budget 2026, citing issues with the current 30% capital gains tax and 1% TDS on transactions.
Data from KoinX's report shows that in FY25, over 30% of users had TDS deductions exceed their final tax payable, and nearly half of TDS-paying users ended with net capital losses.
Less than 5% of traders accounted for 87% of total TDS collections, highlighting liquidity strains on both high-frequency and retail traders.
Zerodha co-founder Nithin Kamath has raised concerns over repeated increases in Securities Transaction Tax (STT), stating that higher taxes are hurting trading activity and reducing government revenue.
The 60% increase in STT on futures and options in Budget 2024 has led to lower trading volumes, with STT collections falling nearly 25% short of the target for FY 2025-26.
- Who
- Indian cryptocurrency industry, Zerodha co-founder Nithin Kamath, and policymakers
- What
- Push for tax regime reform ahead of Union Budget 2026, concerns over Securities Transaction Tax (STT) increases
- Where
- India
- When
- FY 2024–25 (data), Budget 2026 (upcoming), STT hike in Budget 2024
- Why
- Current tax rules are seen as misaligned with economic reality, causing capital lock-in, liquidity issues, and reduced trading volumes
Key facts
- Total TDS collected in FY25
- ₹511.83 crore
- KoinX users' TDS
- ₹130.16 crore (25.43% of total)
- KoinX users' actual tax liability
- ₹91.64 crore
- Excess TDS to be refunded
- ₹38.52 crore
- Percentage of users with TDS exceeding final tax
- Over 30%
- Percentage of TDS-paying users with net capital losses
- Nearly 50%
- Percentage of traders accounting for 87% of total TDS
- Less than 5%
- Net gains reported by investors in FY25
- 50.91%
- Net losses reported by investors in FY25
- 49.09%
- Net gains declared by profitable users
- ₹2,861 crore
- Taxable capital gains
- ₹3,722 crore
- Net losses incurred by investors
- ₹1,178 crore
- Tax paid on taxable gains by investors with net losses
- ₹180 crore
- STT on futures (pre-2024)
- 0.0125%
- STT on futures (post-2024)
- 0.02%
- STT on options (pre-2024)
- 0.0625%
- STT on options (post-2024)
- 0.1%
- STT collections target for FY 2025-26
- ₹78,000 crore
- STT collections as of January 11, 2026
- ₹45,000 crore
- Projected STT collections by March 2026
- ₹57,000 crore
Timeline
RBI's wariness sparks Indian govt's crypto rule review.
Govt's crypto move prompts industry's tax plea.
Crypto sector urges Budget 2026 tax reforms.
Industry presses for fairer crypto tax rules.
Unfair crypto taxes threaten trading activity.
Quotes
Chandni Anandan
Tax Expert at ClearTax
“Capital gains taxation further highlights India’s competitive positioning. Despite being a large equity market with a total market capitalisation of approximately $5.32 trillion, India levies long-term capital gains tax at 12.5% on specified assets. In contrast, the United Kingdom taxes capital gains at rates of up to 24%, without a distinction between short-term and long-term holdings.”
livemint.com
“At the lower end of the income spectrum, India offers a relatively favourable entry point to taxpayers.”
livemint.com
Sources
Union Budget 2026: How India’s tax slabs stack up against US and UK? Check here
Is your capital gains tax fair? Helios Capital’s Samir Arora reveals the ‘missing’ link
Budget 2026 sectoral expectations: Mutual Funds ask for fresh debt tax-saving funds, indexation benefit
Budget 2026: Data flags misalignment in India’s crypto tax rules, calls grow for reform
Higher STT Backfiring: Zerodha’s Nithin Kamath Says Repeated Tax Hikes Are Hurting Trading Volumes & Revenue Collection
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