India’s contradictory stance on crypto taxation versus regulation is pushing trading volume and startups offshore. MP Raghav Chadha argues the current approach, applying heavy taxes without clear legal status or safeguards, results in lost revenue and talent. He advocates for legalizing virtual digital assets as a regulated asset class to repatriate activity and boost tax collection.
India taxes crypto assets but does not provide clear legal status, leaving investors with a 30% capital gains tax and 1% transaction deduction without official protections. MP Raghav Chadha highlighted this contradiction during the Union Budget 2026–27 debate, stating this uncertainty drives activity abroad.
He warned that vague regulations are not stopping crypto but encouraging investors and companies to relocate to jurisdictions like Dubai and Singapore. Data indicates nearly 73% of India’s total virtual digital asset trading volume now occurs on foreign exchanges.
Chadha suggested, “Legalise virtual digital assets like an asset class.” This follows an exodus where an estimated 12 crore Indian investors use offshore platforms, moving nearly $5.4 trillion in trading volume overseas. Approximately 180 Indian crypto startups have also shifted headquarters to more favorable regulatory climates.
The MP’s proposed solution focuses on domestic regulation instead of prohibition. “Let us not fear innovation, let us regulate it,” he stated, advocating for strict oversight and anti‑money laundering safeguards.
He argued a clear domestic regulatory framework could bring activity back onshore, protect investors, and improve compliance. This shift could add between $1.8 to $2.4 billion in annual tax revenue for India.
The 2025 Global Crypto Adoption Index shows India maintains high adoption mainly due to population size and public interest, not supportive policy. Comparatively, North American growth is linked to regulatory advancements like spot ETFs and institutional frameworks.
