India's mainstream cryptocurrency trading platforms recently launched a policy initiative ahead of the budget proposal. WazirX, ZebPay, and other exchanges jointly called on the government to make adjustments in the new year's tax system design.

Their specific demands include several aspects. First, they want to reduce the transaction income tax — currently, the 1% TDS (Tax Deducted at Source) is considered too high, and exchanges hope this rate can be lowered to ease the tax burden on users and platforms. Second, they request the restoration of the loss deduction mechanism, allowing investors to offset trading losses with other income, which is important for participants in volatile markets.

The definition of capital gains tax rules is also a key focus. The current rules are not clear enough, and both exchanges and investors hope the government can issue more specific guidance to distinguish between short-term and long-term holdings.

Interestingly, the attitude of regulatory authorities is becoming stricter. Corresponding to the demand for tax reduction, KYC (Know Your Customer) requirements are being upgraded — including stricter identity verification measures such as live selfie verification and geographic location confirmation. This reflects India's attempt to strike a balance: on one hand, providing a more friendly tax environment for the industry, and on the other hand, strengthening anti-money laundering and risk prevention compliance.