What CoinDCX's Updated Tax Guide Reveals About India's Crypto Ecosystem in 2026

CoinDCX, has refreshed its widely read crypto tax guide for 2026, the guide is a practical resource, walking investors through the 30% tax, the 1% TDS, Schedule VDA filing, and the penalties for getting it wrong. But read as a snapshot of where the ecosystem stands, it tells a larger story: four years into one of the world's strictest crypto tax regimes, the rules have not eased, a new layer of tax has been added, and the platform publishing the guide is among the loudest voices arguing the whole structure is backfiring.

What the guide now says

The core framework the guide lays out is unchanged from 2022. Profits from virtual digital assets (VDAs) are taxed at a flat 30% under Section 115BBH, plus surcharge and a 4% cess, with no distinction between short-term and long-term holdings and no deductions beyond acquisition cost. A 1% TDS applies to transfers under Section 194S, deducted on the full sale value rather than the profit, so it applies whether a trade gains or loses. Losses on one VDA cannot be set off against gains on another, and gains must be reported in the dedicated Schedule VDA of the income tax return.

The notable addition in the 2026 version is a tax that did not exist when the guide was first written. Since 7 July 2025, an 18% Goods and Services Tax applies to platform service fees, trading fees, withdrawals, staking, and the like, levied over and above the 30% tax and the 1% TDS. The CBIC clarified that exchange service fees are a taxable supply, ending earlier ambiguity. This does not touch capital gains directly, but it raises the effective cost of trading, and by some industry estimates pushed exchange operating costs up 15 to 20%, with those costs passed to users. The layering is the point: an Indian investor now meets tax at the point of gain, at the point of transfer, and at the point of paying a fee.

The data behind the guide

A how-to guide does not usually carry a political charge, but this one sits on top of numbers that have become the central argument in India's crypto policy debate. The 1% TDS was designed as a transparency tool, a way to trace who trades what. It traced effectively and deterred ferociously. For active traders and liquidity providers working on razor-thin margins, a 1% deduction on every transaction is prohibitive, locking up capital trade after trade regardless of profit.

The result has been a large-scale exit to offshore platforms. By fiscal year 2025, roughly 72.7% of Indian crypto trading volume had moved abroad, according to tax platform KoinX. Other analyses run higher, with one estimate of around 91.5% of trades occurring offshore between October 2024 and October 2025, processing some ₹4.87 lakh crore in volume. A study by researchers at NALSAR University with a tax partner at Trilegal found the regime drove a 97% collapse in domestic trading volume and an 81% fall in users.

The fiscal arithmetic cuts against the policy's own goals. Compliant domestic exchanges have contributed somewhere around ₹1,000 crore in TDS since the regime began, while analysts estimate the offshore migration has cost roughly ₹11,000 crore in uncollected taxes. The TDS came to about 0.6% of domestic exchange turnover, a thin fiscal return for heavy transactional friction. Investors have also borne the cost of the no-set-off rule directly, with one estimate suggesting around half of Indian crypto investors paid tax despite net losses.

CoinDCX's own position

What makes CoinDCX an interesting publisher of this guide is that it is also a participant with skin in the game and a clear view on reform. The company has put its own numbers into the debate, citing a user base in the tens of millions and TDS contributions to the exchequer, and its founders have campaigned openly for change. Chief executive Sumit Gupta described Budget 2026 as a potential "reset moment," arguing that cutting the TDS from 1% to 0.01% would preserve the government's monitoring ability while removing the incentive that drives traders offshore. He has paired that with calls to align the 30% rate with ordinary capital gains treatment and to allow loss offsetting. Co-founder Neeraj Khandelwal has pushed similar points using the platform's compliance record as evidence that domestic exchanges are part of the solution, not the problem.

This is the wider industry consensus too. CoinSwitch co-founder Ashish Singhal has framed the absence of loss recognition as a fairness problem, taxing transactions without recognising losses. The Bharat Web3 Association has pressed a three-part agenda of tax rationalisation, a proper regulatory framework, and active encouragement of blockchain adoption. The asks have been consistent for years.

The reform that did not arrive

As per the report, none of it made it into the Union Budget for 2026-27, presented by Finance Minister Nirmala Sitharaman on 1 February 2026. She did not mention cryptocurrency at all. The 30% rate, the 1% TDS, and the no-set-off rule were all retained. What the budget did add was enforcement: a new penalty framework effective 1 April 2026, with a ₹200-per-day fine for failing to file VDA transaction statements and a flat ₹50,000 charge for inaccurate reporting, applied to reporting entities, including domestic exchanges like CoinDCX, under the expanded crypto-asset provisions of the Income Tax Act, 2025.

The enforcement posture has hardened on other fronts too. VDA service providers are now reporting entities under the Prevention of Money Laundering Act, with AML and KYC obligations, and 49 exchanges had registered with the Financial Intelligence Unit by early 2026. In October 2025 the FIU issued show-cause notices to non-compliant offshore exchanges. On the income-tax side, authorities have flagged undisclosed VDA holdings worth around ₹888 crore and issued tens of thousands of notices, with undisclosed offshore holdings exposed to the Black Money Act. India is also moving toward the OECD's Crypto-Asset Reporting Framework, with cross-border data-sharing on the roadmap.

The ecosystem this leaves

The picture that emerges from CoinDCX's updated guide, read alongside the data, is a market caught in a contradiction. India ranks among the top countries in the world for crypto adoption, yet most of that activity now happens on platforms outside Indian jurisdiction. Domestic exchanges face thinner liquidity, weaker order books, and a harder path to the institutional participation and DeFi activity that depend on deep markets, while bearing the full weight of an enforcement regime built for the compliant.

The deeper irony is that the regime has partly undercut its own purpose. Crypto in India is legal but unregulated, taxed strictly yet not recognised as currency, closely observed on domestic rails yet largely invisible where most trading now occurs. A guide meant to help investors stay compliant becomes, almost incidentally, a record of how a compliance-first policy can hollow out the very market it set out to formalise. CoinDCX keeps publishing the guide, and keeps lobbying to change what it describes. Whether the next budget listens is the question hanging over the whole ecosystem.

References

1. CoinDCX, "Crypto Tax Guide India" (updated 2026) — https://coindcx.com/blog/cryptocurrency/crypto-tax-guide-india/

2. KoinX, "India 1% TDS on Crypto Statistics for 2026" — https://www.koinx.com/stats/india-tds-on-crypto-statistics

3. HokaNews, "Budget 2026 Could Be India's Crypto Turning Point, CoinDCX CEO Drops Big Hints" (Jan 2026) — https://www.hokanews.com/2026/01/budget-2026-could-be-indias-crypto.html

4. Business Today, "Union Budget 2026: Crypto industry pushes for tax reset, clear regulatory roadmap for growth" (Jan 2026) — https://www.businesstoday.in/personal-finance/tax/story/union-budget-2026-crypto-industry-pushes-for-tax-reset-clear-regulatory-roadmap-for-growth-510757-2026-01-13

5. CoinDesk, "India's Budget 2026 Keeps Crypto Taxes, TDS Unchanged, Adds $545 Penalty for Lapses" (Feb 2026) — https://www.coindesk.com/markets/2026/02/02/india-s-budget-2026-keeps-crypto-taxes-tds-unchanged-adds-usd545-penalty-for-lapses

6. Decrypt, "No Relief For Crypto Investors As India Retains Current Crypto Tax In Budget 2026" (Feb 2026) — https://decrypt.co/356601/no-relief-for-crypto-investors-as-india-retains-current-crypto-tax-in-budget-2026

7. Trade Brains, "India's Budget 2026 Keeps Crypto Taxes, TDS Unchanged, Adds ₹50,000 Penalty for Lapses" (Feb 2026) — https://tradebrains.in/crypto/indias-budget-2026-keeps-crypto-taxes-tds-unchanged-adds-%E2%82%B950000-penalty-for-lapses/

8. Crypto Times, "Bybit to Charge 18% GST on Crypto Services for Indian Users" (Jul 2025) — https://www.cryptotimes.io/2025/07/05/bybit-to-charge-18-gst-on-crypto-services-for-indian-users/

9. TaxTMI, "Crypto taxation in India: Analysis" (Aug 2025) — https://www.taxtmi.com/article/detailed?id=14924

10. AInvest, "India's Evolving Crypto Tax Regime and Its Impact on Onshore Liquidity and Investor Behavior" (Feb 2026) — https://www.ainvest.com/news/india-evolving-crypto-tax-regime-impact-onshore-liquidity-investor-behavior-2602/

11. The420.in, "Budget 2026 May Reset Crypto Rules: ₹4.87-Lakh-Crore Trading Volume Could Return to India If Tax Curbs Ease" (Jan 2026) — https://the420.in/budget-2026-crypto-tax-reform-4-87-lakh-crore-offshore/

12. BestTaxInfo, "Crypto Tax Rules 2026 India: New Changes, Reporting & Penalties Explained" (2026) — https://www.besttaxinfo.in/crypto-tax-rules-2026-india-new-changes-reporting-penalties-explained/

13. Patron Accounting, "Crypto & VDA Tax India 2026 Guide" (Apr 2026) — https://www.patronaccounting.com/blog/crypto-vda-taxation-income-tax-act-2025-rules

Note: Trading-volume and revenue figures are industry and think-tank estimates (KoinX, Esya Centre, NALSAR-Trilegal) rather than official government data, and they vary by methodology and period (offshore-volume estimates range from 72.7% to 91.5%). CoinDCX's self-reported user and TDS-contribution figures are the company's own and unaudited here. All are presented as such.