India’s digital asset market is expanding rapidly. Yet, according to the TIOL Knowledge Foundation’s November 2025 report, an estimated 91.5% of trading activity takes place on offshore exchanges.
That points to an opportunity to strengthen domestic liquidity, tax transparency and transaction-level compliance.
India’s crypto market at a glance
- Total Indian VDA trading: ₹5.33 lakh crore
- Offshore trading: ₹4.88 lakh crore
- Offshore market share: 91.5%
- Offshore trading growth: 85% year on year
- Estimated annual offshore TDS gap: ₹4,877 crore
Figures are the report’s estimates, primarily covering the October 2024 to October 2025 period.
Binance P2P: the INR liquidity opportunity
The report highlights the growing importance of stablecoin liquidity and peer-to-peer markets.
- INR P2P daily liquidity: ₹100–200 crore
- INR share of observed fiat order books: 9–10%
These figures reflect observed order-book liquidity, not verified completed trading volume.
The opportunity: build scalable INR–USDT liquidity infrastructure supported by identity verification, reliable settlements and transparent transaction records.
India’s VDA tax framework
- Section 115BBH: 30% tax on applicable VDA transfer income.
- Section 194S: 1% TDS on qualifying transfers.
- Report’s recommended TDS: 0.01–0.1%.
- Reporting reform: stronger transaction reporting.
The proposed TDS reduction is a policy recommendation, not an enacted tax change.
The report also estimates a cumulative ₹11,000 crore potential TDS gap since July 2022. This is a modelled estimate, not confirmed tax evasion.
Beyond tax: the next compliance opportunity
Tax reporting alone cannot establish the legitimacy of the underlying transactions. Stronger digital asset infrastructure needs four connected capabilities:
- Identity: verified customers, liveness checks and beneficial ownership controls.
- Screening: sanctions, PEP and financial crime risk assessment.
- Payment integrity: counterparty matching, bank payment verification and transaction reconciliation.
- Traceability: continuous monitoring, applicable Travel Rule controls and audit-ready reporting.
The Arbitronix perspective
At Arbitronix Innovation Private Limited, we build technology that connects liquidity intelligence, payment automation, customer verification and financial crime risk controls.
We believe India’s digital asset market needs more than efficient execution. It needs an infrastructure layer that supports trusted counterparties, traceable settlements and responsible growth.
The next competitive advantage in digital assets will be trusted liquidity, not liquidity alone.
Source: TIOL Knowledge Foundation, Taxation of Digital Assets in India, 17 November 2025.
Disclaimer: Market figures and tax gaps are research estimates, not audited transaction volumes or established tax liabilities. This article is informational and does not constitute tax or legal advice.
