Cryptocurrencies are now a mainstream investment option in India, and with that comes the need to understand how they're taxed. Whether you’re trading Bitcoin or earning rewards from staking, being aware of India’s crypto TDS and tax rules is essential. This guide breaks down what TDS means for your crypto activity, how it’s applied, and how you need to stay compliant in 2025.
Crypto Tax Rules in India for 2025
India's crypto taxation framework, established in 2022, remains in effect as of 2025. Profits from the sale of virtual digital assets (VDAs), including cryptocurrencies and NFTs, are taxed at a flat rate of 30%, with no provisions for deductions other than the cost of acquisition. Additionally, a 1% Tax Deducted at Source (TDS) is levied on all crypto transactions exceeding ₹10,000 for salaried individuals and ₹50,000 for business transactions within a financial year. These measures aim to ensure transparency and compliance in the rapidly evolving digital assets landscape.
Crypto taxation in India also comes with tough restrictions, unlike other investment types:
- You can't offset gains from one cryptocurrency against losses from another
- Crypto losses can't be adjusted against any other income source
- Only acquisition costs can be deducted—no claims allowed for mining expenses, or other related costs
- Losses can't be carried forward to future financial years
How to File Crypto Taxes in India
Tax filing for crypto transactions in India needs specific forms and precise calculations. You must pick the right tax form based on your crypto activities and follow exact reporting guidelines to comply with regulations.
Reporting Crypto Gains in ITR-2 and ITR-3
Crypto investors need to use ITR-2 for capital gains or ITR-3 for business income during the 2024-25 financial year (assessment year 2025-26). These forms feature a dedicated "Schedule VDA" (Virtual Digital Assets) section that captures crypto transactions. You'll need to list complete transaction details such as acquisition date, transfer date, cost of acquisition, and money received.
Filing as Individual vs Business Income
Your trading pattern decides your tax filing method. Frequent, high-volume traders should report earnings as business income with ITR-3. Investors who hold crypto longer and trade less often can use ITR-2 for capital gains. The flat 30% tax rate plus applicable cess applies to both methods. Detailed transaction records support your tax calculations and help during any future scrutiny.
Note that you'll face hefty penalties and legal issues if you don't comply with crypto tax regulations in India. Tax authorities pay close attention to crypto transactions and hence you need a clear picture of what happens when you break the rules.
Navigating the Future of Crypto Taxation in India
India's crypto tax framework stands among the strictest worldwide with its flat 30% tax rate and 1% TDS requirement.
Your crypto tax filing accuracy depends on careful record-keeping. You'll need to choose between ITR-2 and ITR-3 based on your transaction patterns. Detailed documentation of all crypto activities helps you report accurately and avoid tax scrutiny.
Non-compliance can trigger severe consequences. Late filing leads to penalties, interest charges, and possible audits that could expose all your financial activities.
Also read: Navigating India's crypto taxation: Top questions answered
FAQs
Q1. What is the tax rate on crypto profits in India for 2025?
A flat 30% tax rate applies to all profits from crypto transactions in India. This rate is uniform regardless of the holding period or the nature of the crypto activity.
Q2. Is crypto legal in India in 2025?
Trading cryptocurrencies is not illegal in India. The government has implemented a taxation framework for crypto transactions and is working on establishing comprehensive regulatory guidelines.
Q3. How do I report my crypto transactions on my tax return?
You need to use ITR-2 for reporting capital gains or ITR-3 for declaring business income from crypto. Both forms include a dedicated "Schedule VDA" (Virtual Digital Assets) section where you must provide complete transaction details.
Q4. Is there a way to reduce the 30% tax on crypto gains?
The 30% tax applies only when you sell or trade cryptocurrencies. Unrealised profits or crypto transfers between wallets or exchanges (like Giottus) do not trigger tax implications. However, there are no provisions for deductions or loss offsets to reduce this tax rate.
Q5. What are the penalties for non-compliance with crypto tax regulations in India?
Non-compliance can result in late filing penalties of up to ₹5,000, interest charges on unpaid taxes, and potential scrutiny from tax authorities. In extreme cases, the tax department may impose a 30% tax on the entire turnover instead of just gains.
Q6. Are crypto gifts taxable in India?
Yes, crypto gifts are taxable under certain conditions.
Q7. How are crypto airdrops taxed?
Crypto airdrops are treated as income and are taxed under "Income from Other Sources" at the recipient's applicable income tax slab rate. The taxable amount is the fair market value (FMV) of the tokens on the date of receipt.
