In a stinging critique of India’s current financial policy, Rajya Sabha Member of Parliament Raghav Chadha has called out the government’s contradictory stance on digital assets. Speaking during the Budget 2026-27 discussion on February 9, the Aam Aadmi Party (AAP) leader highlighted a bizarre fiscal reality: India currently taxes cryptocurrencies as if they are legitimate assets while regulating them as if they are contraband.
“Prohibition is Not Protection”
Chadha’s primary argument centers on the “regulatory gap” that has emerged since the 30% flat tax on Virtual Digital Assets (VDAs) and 1% TDS were introduced in 2022. He argued that while the state is happy to collect revenue, it has failed to provide a framework for investor protection, licensing, or a dedicated anti-money laundering (AML) framework.
“We currently tax these virtual digital assets as if they are legal but we regulate them as if they are illegal,” Chadha stated. “My suggestion is that we need to heavily regulate it, ringfence the ecosystem, and strengthen the AML guidelines.”
The ₹4.8 Lakh Crore “Offshore Flight”
The MP presented alarming statistics to illustrate the cost of regulatory uncertainty. According to Chadha, the lack of an onshore framework has triggered a massive migration of capital and talent:
- Capital Flight: An estimated ₹4.8 lakh crore in trading volume has moved to offshore exchanges.
- Volume Shift: Approximately 73% of India’s total crypto trading now occurs on foreign platforms.
- Startup Exodus: Over 180 Indian crypto startups have relocated their headquarters abroad.
- User Migration: Nearly 12 crore Indians are now forced to use overseas platforms to manage their investments.
Chadha proposed a “Domestic Regulatory Sandbox” with strong AML guardrails, which he estimates could reclaim this activity and generate an additional ₹15,000–20,000 crore in annual tax revenue.
A Bold Pitch for Individual Equity Investors
Beyond the digital asset space, Chadha urged the government to overhaul the equity tax structure. He demanded the abolition of Long-Term Capital Gains (LTCG) tax for individual investors, arguing that the recent hike in the Securities Transaction Tax (STT) makes the dual-taxation model redundant and punitive.
| Current Policy Concern | Chadha’s Proposed Solution |
| VDA Status | Legalize as a formal “Asset Class” with clear licensing. |
| Offshore Trading | Bring activity “Onshore” via a regulatory sandbox. |
| Equity LTCG Tax | Reduce to Nil for individual investors to boost wealth. |
| Global Alignment | Adopt models from Singapore, UAE, and Switzerland. |
The Bottom Line
Chadha’s vision is one of “patient capital” being rewarded rather than penalized. By channeling savings away from unproductive assets like gold and real estate into equities and regulated digital assets, he believes India can modernize its economy while protecting the 120 million citizens already participating in the digital frontier.
