India crypto framework: September 2026 VDA hearing

India's crypto rules are moving again. Progress is slow, but it is on the record. Parliament's Standing Committee on Finance has been running a formal study, "Virtual Digital Assets and the Way Forward," and in September 2026 the Ministry of Finance's Department of Economic Affairs (DEA) was called to give oral evidence before it. That revived a hearing that had earlier been listed and cancelled.

What a Standing Committee hearing is

Parliament's standing committees are panels of MPs that examine specific subjects in more depth than is possible on the floor of the House. When a committee takes up a subject, it can call ministries and other bodies to give oral evidence, meaning officials appear before the members to explain policy and answer questions. The committee then prepares a report with its recommendations and presents it to Parliament.

Those recommendations are not law, and the government is not bound to accept them. A report does, however, put the committee's view on the record and usually draws a formal government response. That is why this study matters even though it does not change any rule by itself.

What is actually being decided

Right now India regulates crypto through two levers: tax (a flat 30% plus 1% TDS) and anti-money-laundering rules enforced through FIU registration. What it lacks is a proper market-structure law, meaning clear rules for exchange licensing, custody of customer assets, and investor redress if something goes wrong. The committee's work is aimed squarely at that gap.

The rules already in place

For readers new to the topic, here is the existing framework in plain terms:

• 30% tax on gains. Income from transferring virtual digital assets (VDAs) is taxed at a flat 30%, plus applicable surcharge and cess, whatever your income slab. Only the cost of acquisition can be deducted.
• No loss set-off. A loss on one crypto asset cannot be set off against gains on another, or against any other income, and it cannot be carried forward.
• 1% TDS under Section 194S. Tax is deducted at source on transfers of VDAs. On Indian exchanges this is usually handled by the platform, and the deduction shows against your PAN, so you can claim it when you file.
• PMLA and FIU-IND. Since March 2023, VDA service providers have been covered by the Prevention of Money Laundering Act. Exchanges serving Indian users must register with FIU-IND, verify customers and report suspicious activity.

None of these rules decides who may run an exchange, how customer coins must be held, or what happens to users if a platform fails. That is the gap a market-structure law would fill.

The interim idea: self-regulation first

Rather than wait years for a full statute, the committee has floated an interim self-regulatory model. Under it, recognised industry Self-Regulatory Organisations (SROs) would operate under a designated regulator such as SEBI or the RBI until a dedicated crypto law is enacted. That would be the first time India put a formal market-conduct layer over its exchanges.

In general, an SRO is an industry body that writes and enforces conduct standards for its members, such as rules on disclosures, handling of customer funds and complaint resolution, while a statutory regulator oversees the SRO itself. The appeal is speed: standards can be set without waiting for new legislation. The usual concern is whether an industry body can police its own members firmly enough, which is why oversight by a designated regulator is central to the idea.

The unresolved tug-of-war

• The RBI remains cautious, keeps banks at arm's length from crypto, and is focused on its Digital Rupee. Its tone softened slightly in 2026, though, and a debate over rupee-backed stablecoins has opened.
• SEBI has hinted it could treat security-like tokens under its remit, which would put it partly at odds with the RBI's line.
• The Finance Ministry kept the 30% tax and 1% TDS unchanged in Budget 2026 and added new reporting penalties from April 2026.

The Digital Rupee (e₹) is the RBI's central bank digital currency, a digital form of the rupee issued by the central bank itself. It is not a cryptocurrency in the Bitcoin sense, and the RBI has generally presented it as a safer, state-backed route to digital payments. Which regulator ends up overseeing which kind of token is one of the main questions any final framework will have to answer.

What to watch next

• The committee's report. Whether it formally recommends the interim SRO model, and which regulator it names.
• The government's response. Whether the Finance Ministry accepts, modifies or sets aside the recommendations.
• Regulator statements. Any change in tone from the RBI or SEBI on crypto, stablecoins or tokenised securities.
• Tax changes. Any future revisit of the 30% rate, the 1% TDS or the no set-off rule would have to come through the Finance Act, typically at Budget time.

What it means for Indian investors

Nothing about your obligations changes today: crypto stays legal, taxed and best used through FIU-registered exchanges. But a clearer framework, if it arrives, could mean stronger custody and redress protections down the line. For context on how the panel got here, see our earlier report on the finance panel's crypto study.

In practical terms, for now:

• Keep using FIU-registered platforms and complete KYC properly.
• Keep records of every trade and the TDS deducted, so filing under the current rules is straightforward.
• Plan for losses you cannot offset, since the no set-off rule still applies.
• Be wary of anyone claiming to know the outcome in advance. Until the committee reports and the government responds, nothing has been decided.

We will update this story when the committee files its report. This is news, not financial or legal advice.

FAQ

Is crypto being banned in India?

No. The committee's work is about building a clearer framework. Crypto remains legal to buy, sell and hold, and gains are taxed.

Will the 30% tax change after this hearing?

Not directly. A committee report can make recommendations, but tax rates change only through legislation, usually at Budget time.

What would an SRO mean for my exchange account?

If adopted, it would mean exchanges following common conduct standards under a regulator's oversight. The details, including any investor protection rules, would depend on what is finally agreed.

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This article is AI-assisted, educational and general in nature. It is not financial advice and never a guarantee of profit. Every trade is at your own risk on your own exchange. See our risk disclosure and editorial policy.