The post India Budget 2026: Data Shows Crypto Traders Paid Tax Even After Losses appeared first on Coinpedia Fintech News
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.
A new report by KoinX, titled India’s Crypto Tax Story 2025, shows what it describes as a widening disconnect between actual trading outcomes and tax liabilities in the virtual digital assets (VDA) market.
Losses for Many, Taxes for Most
The report is based on anonymised data from nearly 7 lakh Indian crypto users who traded during FY 2024–25. It shows investor outcomes were almost evenly split:
- 50.91% of users reported net capital gains
- 49.09% of users reported net capital losses
Despite this balance, investors who finished the year in losses still faced tax bills. According to the data, users who incurred net capital losses of ₹1,178 crore still paid tax on ₹180 crore of taxable gains, as current rules do not allow crypto losses to be offset against gains.
This also differs from the treatment of most other asset classes, where capital gains tax is applied to net profits, not isolated trades.
TDS Improves Compliance, but Locks Up Capital
The report also analysed the impact of the 1% tax deducted at source (TDS) levied on crypto transactions. While the measure has strengthened transaction-level reporting and compliance, it has also led to significant capital lock-in, particularly for high-frequency traders.
Key findings for FY 2024–25 include:
- ₹511.83 crore collected as crypto TDS across the ecosystem
- ₹130.16 crore contributed by KoinX users alone
- Actual tax payable: ₹91.64 crore
- Excess TDS/refunds: ₹38.52 crore
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.
