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India’s Parliament has formally categorized the crypto sector as “high risk” in a note to its Standing Committee on Finance. Intelligence reports link virtual digital assets to drug trafficking, Money laundering, cyber fraud, and repeated tax compliance failures. Enforcement now targets both onshore and offshore exchanges.

What the Committee Heard During May 2026 Hearings

The May 2026 hearings included testimony from WazirX, Binance, and ZebPay—three substantial exchanges operating in India. These exchanges pressed lawmakers for greater regulatory clarity, citing persistent uncertainty and a punitive tax regime. Neither the current 30% tax nor the 1% TDS on VDA gains has changed since 2022, placing unique pressure on Indian crypto traders and businesses.

Enforcement Actions and Tax Collection Surge

The Financial Intelligence Unit (FIU-IND) has registered 54 virtual digital asset (VDA) service providers and imposed penalties totaling ₹29 crore.

VDA tax collections jumped from ₹269 crore in assessment year 2023-24 to ₹437 crore in 2024-25. TDS collections surged 65% from ₹220.82 crore to ₹364.62 crore over the same period. That 62% spike in tax collected signals both better enforcement and the growing scale of India’s crypto market, even under regulatory pressure.

Policy Ambiguity Fuels Capital Flight and Compliance Gaps

Indian traders and exchanges, squeezed by the 30% crypto gains tax and 1% TDS, increasingly use foreign platforms to avoid domestic scrutiny.

Only 1.39 lakh out of 6.45 lakh individuals subject to TDS on crypto transactions reported their income in FY23. Roughly 78% of traders failed to report earnings despite TDS deductions.

The Regulatory Patchwork and the RBI Factor

India’s regulatory structure for VDAs holds fragmented, with constant tension between Parliament’s oversight, tax authorities’ enforcement, and the central bank’s cautious stance. The Reserve Bank of India has repeatedly opposed the formal regulation of crypto assets, claiming they pose unacceptable risks to financial stability.

The Parliamentary Committee is benchmarking India’s emerging VDA regime against global frameworks. No plain licensing or regulatory safe harbor exists for exchanges, which leaves the sector exposed to ad hoc crackdowns. Enforcement actions or new reporting requirements can arrive without industry warning or consultation, compounding market uncertainty.

Indian exchanges such as WazirX and ZebPay have introduced real-time tax calculators and compliance dashboards. Users can now model tax liability in advance, factoring in the unchanged 30% capital gain tax and 1% TDS on crypto transactions.

Media and Market Response: Where Indians Track Crypto Policy

The Economic Times app and ePaper now deliver real-time and daily updates on crypto policy, enforcement, and tax changes from Parliament and FIU-IND. App demand surged in May 2026 after Parliament flagged VDAs as “high risk,” with readership spiking above the six-month average.