Synopsis: India stands at a crossroads in its cryptocurrency world. Traders flock to foreign platforms, dodging high taxes at home. A fresh report from KoinX paints a stark picture. Over 72% of trading volume shifted offshore last year. This trend threatens India’s grip on its own crypto market. Why is this happening now? Let’s dive in.
Traders in India routed most deals abroad last fiscal year. KoinX’s report shows 72.66% of Rs. 51,252 crore volume hit global exchanges. This came from a survey of 670,608 users. Total activity reached Rs. 70,536 crore across platforms like Binance and Bybit.
For instance, domestic exchanges saw just Rs. 19,284 crore. That’s only 27.34 percent of the pie. On the otherhand, offshore spots like KuCoin and Coinbase drew the crowd. Even after these platforms registered with India’s Financial Intelligence Unit, the shift continued.
Punit Agarwal, KoinX’s founder, noted the gap. Registration helps, but tax deductions stay spotty. As a result, traders chase better liquidity overseas. Due to this India’s home turf loses buzz and volume.
TDS Tax Drains Local Liquidity
The 1% tax on deals hits hard at home. Indian exchanges deduct it on every sale over Rs. 10,000 yearly. Yet, it covered just 0.60% of their total turnover. Overall, India collected Rs. 511.83 crore in TDS for FY25.
KoinX users chipped in Rs. 130.16 crore, or 25% of that. However, fewer than 5% of users footed 87% of the bill. High rollers dominate, while small traders slip away.
Agarwal explained the math simply. TDS targets sell-side action only. With Rs. 19,280 crore on local platforms, collections stay low. Moreover, offshore trades dodge automatic cuts. Thus, the tax acts like a liquidity killer. Traders bolt for platforms with less friction.
Refunds added irony, Rs. 38.52 crore went back to users. Still, the burden pushes activity abroad. In short, this setup starves domestic markets.
Also Read: Bitcoin Crashes to $81,000 as Market Turmoil Spreads Across Global Assets
Taxes Ignore Reality
Profits hit Rs. 6,394 crore across spot, margin, and futures trades. Losses topped Rs. 4,781 crore, netting Rs. 2,861 crore gain. Yet, India’s rules wipe out loss offsets. Nearly half of users 49.09% faced net losses of Rs. 1,178 crore.
They still paid Rs. 180 crore in 30% tax on gains. No relief for setbacks. Futures trading showed pain: Rs. 2,492 crore profits versus Rs. 2,742 crore losses. One in five traders joined, but netted a Rs. 250 crore hit.
Non-trading income added Rs. 208 crore from staking and airdrops. All face the flat 30 percent levy, plus cess. As a result, real economics clash with tax math. Users feel overtaxed by Rs. 312 crore yearly. Without fixes, frustration builds.
Budget Fixes Could Save India’s Share
The crypto crowd eyes Union Budget 2026 for change. They want 30% tax cuts, like stocks at 12.5-15%. Loss offsets and carry-forwards top the list. Revisit the 1% TDS toolower it or raise thresholds.
Uniform enforcement on registered offshore exchanges matters. KoinX data proves the stakes. Offshore migration cuts regulator views and tax hauls. With 49 platforms now compliant, reforms could spark recovery.
India’s 2022 rules shifted trillions abroad already. However, real user data from KoinX spotlights the fix. Changes might boost local volumes and compliance. Otherwise, global giants keep winning.
This report dropped January 29, 2026. It warns of a slipping edge. Traders vote with their wallets. India risks watching its crypto scene fade offshore. Will Budget 2026 act? The clock ticks.
Written By Fazal Ul Vahab C H
