India’s Equity Tax Proposal Puts Crypto’s 30% Rate in Focus

Two people with direct knowledge of a confidential pre-Budget submission say India’s Securities and Exchange Board of India (SEBI) recommended targeted equity tax relief, while the government has announced no change and income from virtual digital asset transfers remains subject to a 30% tax.

The tax rates are not directly comparable: equity rates depend on asset type, holding period and transaction conditions, while the VDA rate applies to income from transfers.

The two people said SEBI recommended eliminating long-term capital gains tax for foreign equity investors and exempting domestic mutual fund investors from that tax when they switch holdings kept for more than a year into another scheme. The recommendations are nonbinding, leaving any final decision to the government. They cover specified equity investments and mutual fund switches; they do not propose changing VDA taxes.

At an event in Mumbai on Monday, Nov. 2, Finance Minister Nirmala Sitharaman said, “I will consider all this,” in response to investor concerns. She made no specific commitment to change tax rules.

For tax year 2026-27, the Income-tax Act, 2025, as amended by the Finance Act, 2026, sets a 12.5% rate on qualifying long-term gains above ₹125,000 from specified equity shares, equity-oriented mutual fund units and business trust units, when securities transaction tax (STT) conditions are met. Listed securities generally count as short-term if held 12 months or less. Qualifying short-term gains on covered listed equity transactions are taxed at 20% when STT conditions are met.

Equity capital losses may offset capital gains within limits. Short-term losses can offset gains from other assets, while long-term losses can offset only long-term gains. Unused capital losses can be carried forward for up to eight tax years.

For VDAs, acquisition cost can be deducted from transfer income, but other expenses cannot reduce that income. VDA losses cannot offset other income or be carried forward. The 30% rate applies to income from transfers, not to each transfer’s full consideration.

A separate 1% tax deduction at source applies to qualifying transfer consideration. The annual threshold is ₹10,000 for most payers and ₹50,000 for specified individuals and Hindu undivided families. This withholding is distinct from the 30% tax on income.

The recommendations leave in place India’s existing crypto tax rules; any equity tax change would require a government decision.