Rs 9,00,100 crore of India's crypto trading moved offshore in FY 2025-26, report estimates

In short

• TIOL Knowledge Foundation estimates 95% of India's VDA trading volume in FY 2025-26 happened on offshore exchanges.
• Offshore volume was ₹9,00,100 crore against ₹51,446 crore on domestic compliant platforms, the report says.
• The report estimates ₹19,049 crore in uncollected TDS since July 2022 and ₹57,147 crore in cumulative tax losses.
• It recommends cutting the 1% TDS to 0.01% and allowing crypto losses to be offset against gains.

95% of India's crypto trading went offshore

India's crypto tax policy is pushing trading offshore, according to a report by TIOL Knowledge Foundation. The report estimates that 95% of India's virtual digital asset (VDA) trading volume in the financial year 2025-26 took place on offshore exchanges, with Rs 9,00,100 crore traded abroad against Rs 51,446 crore on domestic compliant platforms. Domestic exchanges therefore accounted for just 5.4% of the market.

TIOL Knowledge Foundation is the research arm of Tax India Online, a publication that tracks Indian tax policy. Its report, dated 13 October, is the first to put a number on how far Indian crypto trading has moved abroad. Every figure in it is the foundation's own estimate, not a government-confirmed figure, and no other outlet has carried the report.

How P2P trading moved the volume

The report points to peer-to-peer (P2P) trading, where users swap crypto directly with each other rather than through an exchange, as the main route offshore. Between July 2025 and April 2026, Indian visitors to a leading offshore P2P platform rose 73%, purchase conversion increased 3.6 times, and INR P2P trading volumes rose 29% between April 2025 and June 2026. The report says users moved to alternative offshore P2P channels instead of returning to domestic exchanges after 25 platforms were blocked in October 2025.

Why the 1% TDS is the sticking point

The report's central complaint is the 1% tax deducted at source (TDS) on VDA transactions, a levy collected on each trade, which sits alongside a 30% tax on gains. It argues this structure pushes traders offshore, and that the inability to set off crypto losses against gains makes it worse. Its recommendation is to cut TDS to 0.01%, keeping a record of transactions while narrowing the cost gap between compliant and offshore trading.

The report estimates Rs 19,049 crore in uncollected TDS since July 2022 and Rs 57,147 crore in cumulative estimated tax losses to the exchequer. These are the report's estimates, not officially confirmed government revenue losses. It projects that offshore crypto trading volume in India could reach Rs 15.27 lakh crore by FY 2030-31, nearly 70% higher than the estimated Rs 9 lakh crore in FY 2025-26, if nothing changes.

What the report wants changed

Beyond the TDS cut, the report proposes allowing crypto losses to be offset against gains and carried forward, clarifying TDS obligations for offshore platforms facilitating P2P trades, requiring offshore platforms targeting Indian users to register in India, and strengthening enforcement through banking channels and app stores. Its scenario modelling suggests a reformed tax framework could generate up to Rs 1,80,814 crore in cumulative capital gains tax over five years. The argument is that a lower tax burden on a larger compliant market could deliver more revenue than taxing a shrinking domestic market at higher rates.

What traders said on X

Reactions on X focused on the tax burden and the loss of business. Shailendra (@0xShailu) said on X that crypto is done in India and it will be a huge economic loss, adding that officials will realise it too late. Jagdish Kumar (@TokenBharat) said on X that the more the government squeezes crypto users, the more it will face this problem, and called for TDS to be cut to 0.01% or less. Noctiz.eth (@NoctizXIII) said on X that offshore at Rs 9,00,100 crore is about 17.5 times the Rs 51,446 crore that stayed domestic, calling it a 17-to-1 venue split rather than a close race.

Neither TIOL nor any government body has responded publicly to the report, and no Finance Ministry or CBDT statement addressing its figures has appeared. The Income Tax department has separately flagged offshore exchanges and the difficulty of tracking them in presentations to the parliamentary finance committee, though nothing ties directly to the TIOL numbers. It isn't clear yet whether the report's recommendations will feed into any formal consultation.

Questions readers ask

How much of India's crypto trading happens offshore?

A TIOL Knowledge Foundation report estimates 95% of India's VDA trading volume in FY 2025-26 took place on offshore exchanges. That is ₹9,00,100 crore offshore against ₹51,446 crore on domestic compliant platforms, leaving domestic exchanges with 5.4% of the market. The figures are the report's own estimates, not government-confirmed.

Why does the report blame the 1% TDS?

The report says India's 1% TDS on VDA transactions, alongside a 30% tax on gains and no loss offset, makes compliant trading costlier than going offshore. It recommends cutting TDS to 0.01% to keep transaction tracking while narrowing the cost gap between domestic and offshore trading.

What could happen if India's crypto tax rules stay the same?

The TIOL Knowledge Foundation report projects offshore crypto trading volume in India could reach ₹15.27 lakh crore by FY 2030-31, nearly 70% higher than the estimated ₹9 lakh crore in FY 2025-26. It warns more trading could stay outside India's tax-compliant exchange ecosystem.

Has the government responded to the TIOL report?

As yet, neither TIOL nor any government body, including the Finance Ministry and the CBDT, has commented publicly on the report or its figures. Separately, the Income Tax department has told the parliamentary finance committee that offshore exchanges are hard to track, though that evidence does not bear directly on the TIOL estimates. Whether the recommendations reach a formal consultation remains open.

Our view

The shift offshore is real, and I have seen it among traders I know: compliance costs and the inability to offset losses are pushing people away from Indian platforms. The 1% TDS, layered on a 30% gains tax with no loss set-off, makes domestic trading expensive in a market where margins are thin. The TIOL Knowledge Foundation's estimate of ₹9,00,100 crore traded offshore against ₹51,446 crore at home is a warning, not a verdict, and it deserves independent scrutiny. A cut to 0.01% would keep transactions visible to the tax authority while narrowing the gap with offshore venues. The test is whether the government opens a consultation on TDS and loss offset; until then, the drift will continue.

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— Keshav Aggarwal

What to watch: The report's recommendations await any government response, with no Finance Ministry or CBDT statement on its figures yet.