India's Central Bank Backs Crypto Ban as Tax Department Flags Compliance Risks

According to government documents, India's Reserve Bank of India has renewed its call for a crypto policy "leaning towards prohibition," while the country's tax department warned that offshore trading and private wallets make tax compliance harder to track.

The RBI wants banks and financial institutions barred from holding, trading, or gaining exposure to crypto assets and privately issued stablecoins. India has approximately 39 million crypto traders holding about $2.1 billion in digital assets, according to tax department estimates. The tax department separately flagged underreporting issues, noting that fewer than a quarter of individuals who made crypto transactions reported them on tax returns. The documents cited offshore exchanges, peer-to-peer trades, and valuation challenges as major compliance obstacles. India currently applies a 30% tax on crypto gains and a 1% transaction tax, rules that have reportedly pushed activity toward offshore platforms.