Key Findings from the Esya Centre Report
A recent survey conducted by New Delhi-based tech policy think tank Esya Centre reveals that Indian investors overwhelmingly support reforming the country's cryptocurrency tax framework. The study, which polled 1,342 highly educated participants across five major cities, highlights critical concerns about current fiscal policies:
- 58% of respondents demonstrated strong understanding of cryptocurrency taxation
- 52% expressed familiarity with anti-money laundering (AML) regulations
- 93% showed preference for collateralized stablecoins over algorithmic variants
The Tax Policy Impact
India's current crypto tax structure (implemented in 2022) includes:
- 30% tax on all cryptocurrency gains
- 1% TDS (Tax Deducted at Source) on transactions
- No loss offset provisions
These measures have reportedly led to:
👉 Significant capital outflow to overseas platforms
- Increased investment migration toward traditional equities
- Growth of offshore trading activity to circumvent domestic taxes
Policy Recommendations
The Esya Centre report suggests that AML regulations alone cannot counterbalance the effects of restrictive taxation. Key proposals include:
- Revisiting the 30% flat tax rate for crypto assets
- Reinstating loss offset provisions
- Adjusting the 1% TDS threshold for smaller transactions
Frequently Asked Questions
Why are Indian investors pushing for tax reforms?
Current crypto taxes create disproportionate burdens compared to other asset classes, discouraging domestic investment and innovation in blockchain technologies.
How does this affect India's digital economy?
The policy environment may inadvertently drive talent and capital overseas, weakening India's position in the global Web3 ecosystem.
What alternatives exist to current policies?
Experts suggest tiered taxation models similar to securities trading or sandbox approaches to balance revenue needs with industry growth.
The Path Forward
While India maintains its stance on combating financial risks through AML measures, the survey indicates that fiscal policy adjustments may be necessary to:
👉 Retain domestic cryptocurrency investment
- Prevent leakage to foreign platforms
- Encourage regulated market participation
- Support technological innovation
The findings underscore the delicate balance between taxation objectives and economic competitiveness in emerging digital asset markets. As global crypto adoption grows, India's policy evolution will significantly influence its position in the blockchain economy.