Crypto Tax in India 2025: Cryptocurrency Taxation, Rates, TDS, and How to File

The Indian government applies stringent rules on the taxation of cryptocurrency under the current law. Digital assets are treated as virtual digital assets (VDAs) and subject to tax on the transfer. Clear guidance can help investors know their responsibilities, prevent penalties and accurately report crypto transactions according to updated regulations

Overview of Crypto Tax in India 2025

The Indian government proposed a specific taxation framework for digital assets with the announcement of Budget 2022. Though crypto trading is legal in India (i.e., not explicitly banned, but regulated through taxation and compliance requirements), the income from it is taxable according to the Income Tax Act.

Under existing tax regulations in India, tax is levied on all income from virtual digital assets at a flat rate of 30%. These rules apply whether you pay in cryptocurrency or exchange crypto assets for INR.

Crypto Tax Rates in India

The government in India imposes strict cryptocurrency taxes for transfers and profits. These rules provide a consistent approach to gains and transparency about reporting requirements.

30% Tax on Income From Transfer of VDAs

Income from the transfer of a VDA is taxed at a flat 30% under Section 115BBH. Tax is calculated on gains from each transfer, with no deduction allowed other than the cost of acquisition. This ensures clarity for cryptocurrency taxation in India and prevents offsetting with other income categories.

Surcharge and Cess Apply on Top of 30%

Surcharge (if applicable) and a 4% Health & Education Cess are levied over and above the 30% tax. For Indian crypto investors, this means that each crypto gain is taxed separately, and the total tax liability increases once these additional charges are applied.

TDS on Cryptocurrency in India

The government also announced guidelines on TDS on cryptocurrency for a better way to track transactions. These terms apply to the transfer of VDAs, and TDS is deducted at the time of credit or payment (whichever is earlier), before settlement.

1% TDS Under Section 194S

A 1% deduction applies to all transfers of VDAs. This mechanism ensures that crypto traders and investors remain visible to tax authorities via reported transactions.

Thresholds ₹10,000 and ₹50,000 for Specified Persons

TDS does not apply if the total consideration during the financial year does not exceed ₹10,000 for regular taxpayers or ₹50,000 for specified persons (individuals or Hindu Undivided Families). These thresholds help reduce the compliance burden for small crypto investors in India.

Who Deducts TDS on Exchange, Broker, or P2P

On crypto exchanges, TDS is usually deducted by the platform. In P2P transactions, the buyer might need to deduct it before sending money.

In-Kind or Crypto-to-Crypto Swaps: TDS Mechanics

Even in cases of wallet-to-wallet transfers or A2A payment models, the TDS provisions can be invoked where assets are transferred between two parties. The rules guarantee consistency in reporting across all types of crypto tax rules.

Taxable and Non-Taxable Crypto Events in India

For compliance purposes, it is important to know what kind of events generate tax. The law clearly separates taxable transfers from exempt activities.

Selling Crypto for INR or Another Crypto Is Taxable

When you sell a VDA for rupees or exchange it for another coin, the tax on gains must be declared. These regulations apply to transferring crypto into fiat or different tokens, and the liability is added to the income tax of an individual.

Spending Crypto on Goods or Services Is a Taxable Transfer

According to the existing laws, if you purchase goods or services using crypto payment gateways, the transfer is considered taxable. The value of goods or services is determined as a capital gain base for calculating tax amount. 

Buying Crypto Is Not Taxable by Itself, but TDS May Apply to the Seller

Acquiring digital assets is not taxable in India at the time of purchase. However, TDS on crypto transactions can be applicable to the seller who gets the consideration.

Transferring Between Your Own Wallets Is Not a Taxable Event

There will be no tax implications in case you just move them from wallet to wallet or hold them long term. Such actions should not be considered a taxable event according to the crypto tax rules, because there is no transaction to another person.

Airdrops, Forks, Gifts, Mining, Staking

India's tax law also determines how various events outside of regular trading are taxed. These rules apply both at receipt and again at transfer, thus you cannot avoid reporting crypto income.

Airdrops and Hard Forks: Taxed on Receipt at FMV, 30% on Later Transfer

Tokens received through airdrops or hard forks are taxable at their fair market value upon receipt. When sold, they are subject to the 30% tax as mandated by the guidelines on virtual digital assets.

Gifts of Crypto: Tax Rules Under Section 56(2)(x) and ₹50,000 Limit

If the value of gifted coins is more than ₹50,000, it is taxable under the provisions of crypto gifts in India. Transfers to certain family members are not subject to this requirement.

Crypto Mining Income: Taxed on Receipt; 30% on Later Transfer

Mining rewards are considered income from crypto and included in the taxable base at the time of receipt. Later transfers are also subject to the flat 30% tax.

Staking Rewards: Taxed on Receipt; 30% on Later Transfer

Staking rewards are also added to the income tax at the time of receiving. Any subsequent disposal of these assets then becomes subject to the 30% VDA tax.

Losses and Set-Off Rules

One of the most severe rules in India relates to the accounting for digital assets losses. The law is explicit that investors are unable to adjust losses against other types of income.

No Set-Off Across VDAs or Other Heads and No Carry-Forward

Any loss from crypto activity cannot be offset against gains from other assets, including other VDAs. This limitation was introduced to the crypto tax rules, so that each transfer is approached separately. Additionally, losses can’t be carried forward to future periods generating tax consequences for active traders.

How to Calculate Tax on Crypto in India

Investors should understand the way liability on digital currencies is calculated. The government has provided detailed rules to make sure every transaction is properly recorded and taxed.

Cost Basis and Gain Computation, Including FMV for Swaps

When you sell or swap a coin, gains in your income tax must be calculated on the difference between cost of acquisition and fair market value. In the case of exchanges, FMV is considered the basis of crypto gains, which ensures consistency across transactions.

Record-Keeping for Each Crypto Transaction

Traders need to keep track of foreign exchange conversions, wallet movements and the type of crypto asset they are using. These data help to report gains from cryptocurrencies correctly, minimizing disputes during assessments.

Filing and Reporting to the Income Tax Department

In order to meet regulation requirements, investors are supposed to declare their crypto activity in the appropriate income tax forms. The authorities have implemented a structured mechanism to record every aspect of digital asset trades.

Report Under ITR Schedule VDA in ITR-2 or ITR-3

Crypto gains are considered income and need to be mentioned in Schedule VDA. The system is designed to ensure that crypto traders and investors provide all transfer details.

Deadlines and Updated ITR Utilities for AY 2025-26

The due date for submission of income tax return for AY 2025-26 has been extended from 15th September, 2025 to 16th September, 2025. All crypto-related liabilities must still be paid within this specified period. Updated utilities now contain a VDA section, making it easier to show the information required under the law. 

Compliance and Enforcement

The Indian authorities actively enforce compliance with the rules on crypto taxation. Both TDS collection and reporting requirements are strictly monitored.

Penalties for TDS/Reporting Failures

Failure to deduct or deposit TDS can result in interest charges and penalties under the tax law. Inaccurate tax disclosures may lead to notices from the Income Tax Department.

Current Enforcement Trends and Notices

Authorities are also monitoring cases of misuse, including tax evasion and payment fraud, to strengthen compliance in the crypto ecosystem. Recent news highlights increased scrutiny of unreported trades, with regulators issuing updates on crypto tax measures to ensure transparency.