Crypto Union Budget 2026: Tax Relief & Digital Rupee Push

Summary

Indian crypto exchanges are pushing for tax reforms to bring trading volumes back onshore

A rationalized TDS regime could revive liquidity and transparency

Digital Rupee adoption is expected to expand with offline and programmable features

Clearer VDA classification may finally reduce regulatory uncertainty

Market sentiment hinges on whether policy shifts from deterrence to participation

Crypto at a Crossroads: What Union Budget 2026 Could Mean for India’s Digital Asset Market

India’s crypto ecosystem is heading into Union Budget 2026 with unusually high stakes. After years of restrictive taxation and regulatory ambiguity, the industry is now at a breaking point. Nearly ₹5 lakh crore in crypto trading volume has shifted to offshore exchanges, not due to lack of interest, but because current policies make domestic participation inefficient and costly.

For Indian investors, traders, and research-driven market participants, this Budget is less about hype and more about repatriation, clarity, and competitiveness. Let’s break down the key crypto expectations from Union Budget 2026, the likely policy direction, and what it could mean for Indian markets.

Why Crypto Policy Matters in Union Budget 2026

Crypto is no longer a fringe asset class in India. Despite tough rules, millions of Indians actively track Bitcoin, Ethereum, and other virtual digital assets as part of diversified portfolios. However, the current framework has unintentionally pushed activity offshore, reducing oversight while hurting domestic exchanges.

From a macro perspective, this capital flight impacts tax collection, data visibility, and India’s ambition to lead in financial innovation. Union Budget 2026 is widely seen as an opportunity to correct course without compromising regulatory oversight.

The Big Three Tax Demands from the Crypto Industry

TDS Rationalization and Liquidity Revival

The 1 percent TDS on every crypto transaction remains the single biggest friction point. Unlike equities, where TDS is minimal, crypto traders see capital locked up with every trade, making active strategies unviable.

Domestic exchanges argue that since platforms are now registered with FIU-IND under PMLA norms, traceability concerns are already addressed. Reducing TDS to 0.01 percent or 0.1 percent could immediately improve volumes, price discovery, and onshore participation.

A real-world parallel can be seen in equity markets, where lower transaction costs helped deepen liquidity over time.

Loss Set-Off and Carry Forward

Currently, crypto gains are taxed at 30 percent, but losses cannot be adjusted. This is unlike equities or derivatives, where netting losses is standard practice.

For serious traders and research-backed strategies, this creates an uneven playing field. Allowing loss offset and carry forward would align crypto taxation with established asset classes and encourage more disciplined, transparent trading behavior.

Moving Away from the Flat 30 Percent Tax

Industry stakeholders are also advocating a shift from the flat 30 percent tax to a more nuanced structure. Options include aligning long-term crypto gains with equity LTCG rates or taxing gains as per individual income slabs.

Such a move would not eliminate taxes but would make them more proportionate, especially for retail investors experimenting with small allocations.

Digital Rupee: The Other Side of India’s Crypto Story

While private crypto faces tight rules, the Digital Rupee is steadily gaining policy support.

Offline Digital Rupee Transactions

One expected Budget announcement is the expansion of offline Digital Rupee functionality. This would allow transactions in areas with weak or no internet, strengthening financial inclusion in rural India.

For context, this mirrors how UPI adoption surged once reliability improved across geographies.

Programmable Money and Targeted Spending

The RBI is also testing programmable Digital Rupee use cases, such as subsidies that can only be spent on specific goods. Budgetary allocation to scale these pilots could position India as a global leader in central bank digital currency innovation.

From a market lens, this signals that India is not anti-technology, but selective about how digital money evolves.

Regulatory Clarity and Institutional Confidence

Clearer VDA Classification

One of the most awaited outcomes of Union Budget 2026 is a sharper definition of Virtual Digital Assets. Are they commodities, securities, or a new financial category altogether?

This classification matters for compliance, reporting, and institutional participation. Clear rules would allow research teams, portfolio managers, and even listed companies to approach crypto-linked exposure with greater confidence.

Jan Vishwas 2.0 and Compliance Relief

There is also hope that minor crypto-related compliance issues could be decriminalized under a Jan Vishwas-style framework. Moving from deterrence-based regulation to clarity-driven oversight would improve ease of doing business without weakening controls.

Impact on Indian Markets and Investor Sentiment

If even part of these reforms materialize, domestic crypto exchanges could see a sharp rebound in volumes. More importantly, capital that currently sits offshore may return to regulated Indian platforms, improving transparency and data quality.

For investors, this could mean better pricing, improved liquidity, and stronger integration of crypto within broader financial planning. Market sentiment, especially among younger investors, would likely improve if policy signals turn constructive.

How Swastika Investmart Supports Investors in a Changing Market

As financial markets evolve, investors need platforms that combine regulatory discipline with research depth. Swastika Investmart, a SEBI-registered intermediary, focuses on tech-enabled investing, strong research tools, and continuous investor education.

While crypto regulations are still evolving, Swastika Investmart’s emphasis on compliance, market insights, and customer support helps investors navigate uncertainty with confidence across asset classes.

If you are tracking how policy changes could reshape emerging investment themes, having a research-backed partner matters.

Common Questions Around Crypto and Union Budget 2026

Will Union Budget 2026 reduce crypto taxes in India?
There is no official confirmation yet, but industry expectations strongly point toward TDS rationalization and possible tax structure tweaks.

Why is TDS such a big issue for crypto traders?
High TDS reduces trading capital and liquidity, making active strategies inefficient compared to other asset classes.

Is the Digital Rupee a replacement for private crypto?
No. The Digital Rupee serves as a sovereign digital currency, while private crypto remains a separate asset class with different use cases.

What does VDA classification mean for investors?
Clear classification would define compliance rules, reporting standards, and institutional participation norms.

Should investors wait before increasing crypto exposure?
Given regulatory uncertainty, a cautious and research-backed approach remains prudent until policy clarity improves.

Closing Thoughts

Union Budget 2026 could mark a turning point for crypto in India. The focus appears to be shifting from restriction to recalibration, aiming to bring capital back home while maintaining oversight. For investors, staying informed and aligned with compliant, research-driven platforms like Swastika Investmart can make all the difference in navigating this transition.