Overview of tax regulations in India
For exercise 2024-2025, Indian tax law deals with cryptocurrencies as virtual digital assets (VDAS) under the 1961 income law. Article 2 (47A) states what this means: any code, number, token or information element created by cryptography counts as VDA. The only exception is money itself – Indian rupees or fiduciary currency from any other country.
VDAS include cryptocurrencies like Bitcoin (BTC) and ether (ETH), as well as non-buttons (NFT) and similar digital tokens. Although it is legal to buy, sell and hold VDA, they are not recognized as valid payment methods.
In other words, Crypto operates in a legally ambiguous space in India in 2025. It is authorized but closely monitored for the purpose of anti-delated taxation and money laundering (LMA).
Several agencies in India supervise cryptographic transactions. The income tax department applies fiscal compliance, guided by the Central Direct Tax Council (CBDT) under the Ministry of Finance, which establishes tax policies.
Meanwhile, the financial intelligence unit (FIU-Ind) guarantees that the platforms meet LMA standards, while the Bank of India (RBI) reserve and the Securities and Exchange Board of India (SEBI) shape wider regulatory policies.
These bodies work together to supervise cryptographic tax in the country.
The income tax bill (n ° 2), 2025, received a presidential consent on August 22, 2025, thus replacing the 1961 law on income tax.
Taxable events for cryptographic traders in India
India places cryptographic transactions in a specific tax framework, with a stable tax of 30% on the gains of transfers and a tax of 1% at the source (TDS) applied to all transfers, whether profitable or not.
A taxable event in crypto is any activity that creates a tax obligation under Indian law. This includes transactions that produce income, gains or measurable benefits in fiduciary money. If you exchange or invest, know what matters as a taxable event is essential to remain in accordance with the income tax law.
The main taxable events include:
- Trade: The exchange of crypto for another crypto or fiduciary currency is taxable.
- ELLEATEMENTS: Counted as an income when received.
- Airs and Frofs hard productions: Treaty like an income once the tokens are credited.
- Minor income: Taxed as a income, with subsequent sales subject to capital gains tax.
- Crypto payments: Considered a taxable or professional income.
Non -taxable events include the detention of digital assets without selling or transferring the crypto between personal wallets. Because these actions do not produce income or earnings, they are not subject to tax.
Did you know? Indian law has no tax relief if you lose your crypto due to theft or hackers. Non-compliance can attract sanctions, interests and prosecution for a voluntary escape.
Cryptography rate and classifications
In India, cryptocurrency income is mainly classified as corporate income or capital gains. If trading is regular and systematic, the profits are imposed as a business income within the framework of standard income tax tiles. For most individual investors, the benefits of the purchase and sale of cryptocurrencies are considered capital gains.
As of August 22, 2025, short -term capital gains (STCG) and long -term capital gains (LTCG) on VDAs are taxed at a flat rate of 30% under article 115BBH.
This rule is applicable, regardless of the duration of assets. No deduction, with the exception of the acquisition cost, is authorized and the losses of a VDA cannot be offset against another or postponed.
Crypto business income is imposed on slabs, but often faces a similar tax burden due to the stable rate of 30% for VDA.
In addition, a 1% TDS is applied to all cryptography transfers above a certain threshold to ensure transparency and compliance on platforms. This includes transactions on centralized exchanges and peer transactions (P2P).
TDS on VDAS in India
The tax framework of India for cryptocurrencies includes a 1% TDS under article 194S. This compulsory deduction applies to most VDA transactions and has been introduced to improve compliance and monitor the expanding cryptography market. The main aspects of crypto TDs are:
- TDS mechanism: When buying a VDA, the buyer deduces a fixed percentage of the amount of the sale as TDS and deposits it from the government. This deducted amount is the tax retained of the seller’s payment.
- TDS and threshold rate: Article 194S imposes a TDS of 1% on the amount of the sale if the transactions exceed 50,000 Indian rupees during an exercise. In some cases, this threshold is reduced to 10,000 rupees.
- TDS for non -monetary transactions: If a buyer buys a VDA using another VDA (non-Cash payment), he must deduct 1% of TDS in cash, depending on the sales value and submit to the government.
- Mixed payment scenarios: When a buyer pays a VDA with a combination of cash and non-money (for example, another VDA) and the cash portion is insufficient to cover the TDS by 1%, the buyer must pay the additional TDS amount of his own funds.
- No tanning requirements for specified people: Under article 203a, a “specified person” (as defined by law) is not required to obtain a tax deduction number and recovery account (TAN) for TDS purposes.
- TDS exemption for specified people: No TDS is deducted for a specified person if the total consideration of VDA during an exercise is 50,000 rupees or less.
- TDS exemption for non -specified people: For people other than specified people, no TDS is deducted if VDA consideration is 10,000 rupees or less during an exercise.
- Precedence on electronic commerce rules: If a VDA transaction is both articles 194 and article 194-O (linked to electronic commercial operators), the provisions of articles 194 are priority.
- TDS on suspense or temporary accounts: If the buyer files the VDA payment in a suspense or temporary account of the seller, the seller is responsible for the deduction of the TDS.
Did you know? The use of foreign grants does not exercise the benefits of traders in offshore platforms. They must declare their transactions in Indian ITRs, which can trigger a meticulous examination of FEMA.
How to calculate cryptographic taxes in India
To calculate cryptographic taxes in India, you must first determine the basis of costs, which is the purchase price of the VDA plus expenses related such as exchange or transaction costs. This serves as the basis for calculating gains or losses when the asset is sold or transferred.
Traders can use methods such as the first surround (FIFO), the last input (LIFO) or the specific identification to follow the transactions, depending on the accuracy of their recordings. The method chosen affects the calculation of the taxable gain and must be used in a coherent manner.
In Crypto-Crypto transactions, the transaction is treated as selling an asset (triggering gains or losses) and by buying another, both assessed at their fair price in rupees at the time of trade.
Certain expenses, such as transaction costs, wallet or exchange costs and the costs of cryptographic tax software, can be included in the cost of acquisition. However, Indian law does not allow wider deductions beyond these acquisition costs.
Reporting requirements for tax cryptography and compliance in India
Indian tax law makes cryptographic transactions compulsory, without exception for losses. Revenues must be indicated in the VDAS category. ITR-2 generally covers capital gains and ITR-3 applies to the company’s income. From exercise 2025-26, a new VDA calendar will require that each cryptographic transaction be reported separately.
Taxpayers must keep specific records, including transaction details, exchange statements, portfolio addresses and rupee assessments, to support their deposits. These recordings are essential, especially during audits or a meticulous examination.
For individuals who do not need it, the deadline for producing income declarations in 2025 is July 31, 2025. Companies demanding an audit must deposit by October 31, 2025.
Non-compliance can lead to sanctions, such as interest on unpaid taxes, late deposit fines and potential proceedings for deliberate tax evasion. Consequently, timely and precise reports are crucial for merchants and cryptographic investors.
Did you know? Crypto gifts are taxable if the value exceeds 50,000 rupees, unless received from parents or on specific exempt occasions.
Common challenges and problems for cryptographic merchants in India concerning taxation
Taxation is a complex question for crypto traders in India due to the evolution of regulations and limited clarity in certain areas of the cryptographic ecosystem. Although the VDA gains are taxed, several challenges create difficulties in confusion and compliance.
The main challenges include:
- Lack of clarity of tax laws for deffi and nft: The regulations for the development, NFT loans and sales are not clear, which leads to inconsistent reports.
- Monitoring of high volume trades on several platforms: Frequent exchanges on various exchanges make it difficult to accurately calculate gains and maintain recordings.
- Tax implications of cross -border transactions: The use of foreign exchanges or portfolios raises questions related to the 1999 law on the management of foreign exchanges (FEMA), double tax requirements and the international declaration.
- Treat with lost or stolen cryptographic assets: The Indian tax law offers no relief for theft or loss, leaving uncertain traders on how to report these events in their deposits.
