India’s cryptocurrency taxation framework, established under the Income Tax Act, imposes a uniform 30% tax on profits derived from virtual digital asset (VDA) transactions. This levy applies regardless of holding period, eliminating differentiation between short-term and long-term capital gains. Additionally, a 1% tax deducted at source (TDS) applies to all crypto transactions exceeding ₹10,000 in a financial year, creating important compliance considerations for active traders.
The tax applies broadly to transactions including crypto-to-crypto trades, sales for fiat currency, and using digital assets for payments or purchases. Notably, losses from cryptocurrency transactions cannot be offset against other income types, though they may be carried forward to offset future crypto gains. The regulatory landscape requires meticulous record-keeping of all transactions, including acquisition costs, sale proceeds, and transaction timestamps.
For 2025, traders should anticipate enhanced compliance requirements as Indian authorities strengthen reporting mechanisms. The Central Board of Direct Taxes has clarified that crypto income must be separately declared in tax returns under the designated ‘Virtual Digital Assets’ category. Professional tax consultation is recommended given the evolving interpretation of regulations and increasing scrutiny of digital asset transactions.
