The Indian cryptocurrency industry is looking forward to the Union Budget 2025, which will include measures that provide regulatory clarity, tax relief, and innovation incentives. Key expectations include a well-defined regulatory framework, lower capital gains and transaction taxes, and crypto-related income being treated equally with other income sources. Industry leaders feel that such measures might spur growth and position India as a global powerhouse for blockchain technology and digital assets.

India's decision to implement crypto taxation legislation in 2023 seems to be a positive move forward, indicating that the government is open to this thriving sector. Experts now warn that this is only the beginning, and that it must address the legitimacy of crypto assets, as the sector has long demanded. Gracy Chen, CEO of Bitget, stated, "We are closely monitoring India's regulatory attitude. It advocates for a balanced approach and ample scope in Budget 2025 to encourage innovation and financial inclusion, cementing India's position as a financial and commercial leader."

As cryptocurrencies gain popularity, there is rising worry about their regulation. Sathvik Vishwanath, CEO and Founder of Unocoin, argued for the establishment of a dedicated regulatory agency for cryptocurrencies to promote transparent and effective governance. Vishal Sacheendran, Head of Markets at Binance, feels that a well-balanced regulatory environment should encourage innovation while protecting investors.

The cryptocurrency market had phenomenal growth in 2024, with Bitcoin surpassing $100,000 and receiving considerable institutional investment. Indian investors are increasingly interested in meme coins, with Dogecoin and Shiba Inu rising as favorites. The $230 million hacking event at WazirX in July 2024 demonstrated the urgent necessity for rigorous laws to protect consumers and investors.

Simplifying Tax Structure

Taxation is one of the most contentious concerns for the cryptocurrency business. Budget 2022-23 imposed a 30% tax on gains from virtual digital assets (VDAs) and implemented a 1% tax deducted at source (TDS) on all transactions. According to industry leaders, these policies have stifled growth and innovation. According to Shivam Thakral, CEO of BuyUCoin, one of the primary issues has been high taxes, and he expressed hope that the government will cut the tax burden in Budget 2025 to create a more favorable regulatory environment.
                                 
One of the primary concerns is the taxation of crypto assets vs other financial products. Listed securities, such as equities and equity mutual funds, are subject to a 20% short-term capital gains tax and a 12.5% long-term capital gains tax, respectively. In contrast, crypto assets are taxed at a fixed rate of 30%. In addition, investors in traditional assets can deduct losses against gains and carry unadjusted losses forward. In contrast, such provisions do not exist for cryptocurrency assets, putting them at a disadvantage. Thangapandi Durai, CEO of Koinpark, argued that allowing crypto investors to offset their losses against gains would increase participation and clarity.

Incentives for innovation are another essential industry necessity. According to Raj Karkara, COO of ZebPay, there is a need for laws that provide subsidies or tax breaks to blockchain and Web3 firms, placing India as a leader in decentralized banking, digital identification solutions, and asset tokenization. The industry believes that clear laws and lower taxes may unlock enormous potential for firms and boost the country's economic growth. The crypto sector is drawing inspiration from global trends, particularly the United States' efforts to regulate digital assets. According to Srinivas L, Founder and CEO of 9Point Capital, "India cannot fall behind in this domain". India can become a global leader in digital asset adoption and innovation by promoting transparency, lowering the tax burden, and establishing a strong regulatory environment.

Industry analysts feel that Budget 2025 is a perfect opportunity for the government to address the difficulties that the crypto sector is now facing. Clear rules, rationalized taxes, and incentives for blockchain and AI innovation can strengthen the Indian ecosystem and propel growth in this potential area. India can lead the digital asset revolution by aligning its policies with global trends while also addressing domestic concerns, resulting in a vibrant ecosystem that balances innovation and investor safety.