Indian mainstream crypto trading platforms recently launched a policy initiative ahead of the budget proposal. Exchanges like WazirX and ZebPay jointly called on the government to make adjustments in the new year's tax system design.

Their specific demands include several aspects. First, they want to reduce the transaction income tax—currently, the 1% TDS (Tax Deducted at Source) is considered too high, and exchanges hope this rate can be lowered to ease the tax burden on users and platforms. Second, they request the reinstatement of the loss deduction mechanism, allowing investors to offset trading losses with other income, which is important for participants in volatile markets.

The definition of capital gains tax rules is also a key focus. The current rules are not clear enough, and both exchanges and investors hope the government will issue more specific guidance to distinguish between short-term and long-term holdings for tax purposes.

Interestingly, regulatory attitudes are becoming stricter. Corresponding to the demand for tax reductions, KYC (Know Your Customer) requirements are being upgraded—including more rigorous identity verification measures such as live selfie verification and geographic location confirmation. This reflects India’s attempt to strike a balance: on one hand, creating a more friendly tax environment for the industry, and on the other, strengthening anti-money laundering and risk management compliance.