India Budget 2026: Data Shows Crypto Traders Paid Tax Even After Losses

As the Union Budget 2026 approaches, India’s crypto tax regime is facing renewed scrutiny after fresh data showed that nearly half of crypto investors ended FY25 with losses, yet many still paid taxes due to the structure of capital gains rules and transaction-level deductions.

More than 30% of users had TDS deducted in excess of their final tax liability, making refunds a routine outcome rather than an exception. Nearly half of all TDS-paying users still ended the year with net losses, according to the report.

Concentration and Liquidity Concerns

The data also points to a sharp concentration in trading activity. Less than 5% of traders accounted for 87% of total TDS collections, reflecting the outsized role of active traders who typically operate on thin margins.

Analysts say repeated upfront deductions reduce liquidity, widen bid-ask spreads, and raise trading costs, especially during periods of market volatility.

Budget 2026 in Focus

With Budget 2026 approaching, industry observers say the findings add pressure on policymakers to revisit crypto taxation. Expectations centre on rationalisation rather than expansion, including possible changes to the TDS rate, thresholds, or rules around loss offsets.

The broader policy question remains whether India’s crypto tax framework should continue to prioritise transaction visibility, or evolve toward a system that better reflects net economic outcomes.

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