India should introduce a clear and structured regulatory framework for crypto-assets instead of relying solely on taxation and fragmented oversight, according to a new research report from Gujarat National Law University.
The report, titled “Crypto-Assets in India: Assessing the Case for Regulation,” was prepared in collaboration with the Society of Indian Law Firms
It examines India’s current policy approach toward digital assets and proposes several regulatory models that policymakers could consider while shaping the country’s crypto governance.
Researchers argue that despite the rapid growth of digital asset adoption in India, the country still lacks a dedicated legal framework governing cryptocurrencies and related services
Instead, authorities have primarily relied on taxation rules and anti-money-laundering compliance requirements to monitor the sector.
India’s current stance toward crypto is often described as “taxed but not regulated.” In 2022, the government introduced strict taxation rules for what it defines as “Virtual Digital Assets” (VDAs), a category that includes cryptocurrencies and NFTs
Under these rules, profits from crypto transactions are subject to a flat 30% tax regardless of the investor’s income bracket or the holding period of the asset.
In addition to the 30% tax on gains, the government also imposed a 1% tax deducted at source (TDS) on most crypto transactions above certain thresholds
The measure was designed to track trading activity and improve compliance by creating a transaction trail for tax authorities.
However, the GNLU report notes that while these fiscal measures allow authorities to monitor the sector, they do not provide comprehensive regulatory clarity for investors, exchanges, and businesses operating in the Web3 ecosystem
The absence of a defined legal structure has created uncertainty that may affect capital flows, innovation, and the growth of India’s digital asset industry.
To address this gap, the research outlines five possible regulatory models, including a system of industry self-regulation under government oversight until a full regulatory framework is established.
The study also highlights the scale of crypto adoption in the country, noting that millions of Indians are already participating in the market despite the lack of clear legislation.
India now faces a critical policy decision: whether to continue relying on taxation and indirect oversight or move toward a comprehensive regulatory regime that balances innovation with investor protection in the evolving digital asset ecosystem.
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