High TDS Index Causes India to Lose 75% of Cryptocurrency Trading Volume to Foreign Countries

VCsSuckMyLiquidity · 2026-02-12T09:07:19+00:00

India's cryptocurrency tax policy is pushing traders to international exchanges, with around 75% of previous domestic trading volume now overseas. The high TDS rate is a key factor driving this shift, prompting calls for adjustments in the 2026 budget to restore trust and encourage local trading activities. A balanced regulatory framework is essential to maintain investor confidence and promote blockchain innovation in India.

VCsSuckMyLiquidity

2026-02-12 09:07:19

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India’s cryptocurrency tax policy is creating unintended consequences: traders are shifting to international exchanges. According to data from NS3.AI, approximately 75% of the previously onshore cryptocurrency trading volume has moved abroad, reflecting a significant decline in domestic trading activity.

Impact of TDS Index on Domestic Platforms

The high TDS (Tax Deducted at Source) index applied to cryptocurrency transactions is the main reason traders are leaving the domestic market. These strict tax regulations not only increase transaction costs but also cause inconvenience for local users.

As international exchanges offer more favorable trading environments with lower costs, the migration of trading volume becomes inevitable. Domestic platforms are experiencing a substantial decrease in active users and daily trading volume.

Pressure to Adjust TDS Index in the 2026 Budget

As the 2026 federal budget is under review, policymakers face increasing demands from the cryptocurrency community. They are called upon to lower the TDS index to a more reasonable level and allow traders to offset losses from failed transactions.

These changes are seen as necessary to restore community trust and facilitate the recovery of domestic trading. Without policy adjustments, the risk of continued trading activities moving abroad is very high.

Proposal for Balancing Tax Revenue and Regulations

Industry experts and cryptocurrency associations are working to promote a balanced legal framework. They argue that there needs to be a compromise between government tax collection requirements and the need to encourage healthy domestic trading activity.

The goal is to rebuild trust, incentivize blockchain innovation, and retain investment capital in India. A reasonable cryptocurrency tax policy will not only help restore the domestic market but also strengthen government oversight of trading activities.

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