Raghav Chadha Says Crypto and Stablecoins Are Taxed as Legal but Treated as Illegal
India suffers from an important point in terms of Virtual Digital Assets (VDAs), such as cryptocurrencies and stablecoins. According to Raghav Chadha, the country is now taking a conflicting approach: taxing VDAs as legal assets while regulating them as illegal.
Currently, Bitcoin(BTC) transactions in India are subject to 30% capital gains tax and 1% TDS on each transaction. Despite significant taxation, VDAs lack proper legal status. There is no clear investor protection framework, no specific AML (anti-money laundering) organization, and no established regulatory monitoring for the sector.
The Cost of Regulatory Uncertainty
This lack of clarity has pushed both users and businesses away from India. Industry data highlights the impact:
- Over 12 crore Indians now trade crypto using overseas platforms
- Nearly ₹4.8 lakh crore worth of VDA trading has moved offshore
- Around 73% of India’s crypto trading volume now happens on foreign exchanges
- More than 180 Indian crypto startups have shifted operations abroad
This offshore migration has resulted in lost jobs, reduced transparency, and lower regulatory control for Indian authorities.
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Regulation, Not Prohibition
The solution, as indicated in the statement, is not to restrict innovation, but to appropriately regulate it within India. Giving VDAs a distinct asset class status would enable the government to monitor activity, protect investors, and assure compliance.
A domestic regulatory sandbox, paired with robust AML controls, can incentivise platforms to operate in India. This would increase openness, decrease misuse, and restore faith in the system.
Economic Opportunity for India
Bringing cryptocurrency activity back onshore could provide enormous benefits. Creating a clear regulatory framework might increase annual tax collection by ₹15,000-20,000 crore, create jobs, and enhance India’s digital economy.
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