Cryptocurrency taxation in India is no longer unclear or optional. Since the introduction of a definitive framework in 2022, India’s crypto tax rules have remained strict and consistent, including for FY 2024–25 (Assessment Year 2025–26).
If you trade, invest in, or hold digital assets, it’s essential to understand how Virtual Digital Assets (VDAs) such as cryptocurrencies and NFTs are taxed. This guide explains the current tax rates, TDS rules, loss treatment, and compliance requirements in simple terms, as notified by the Income Tax Department.
What Are Virtual Digital Assets (VDAs)?
Under Indian tax law, Virtual Digital Assets (VDAs) include:
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Cryptocurrencies like Bitcoin, Ethereum, and altcoins
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Non-Fungible Tokens (NFTs)
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Any digital asset using cryptographic technology
India did not have a definitive crypto tax framework before 2022. That changed with the insertion of Section 115BBH of the Income Tax Act, 1961, which now governs cryptocurrency taxation. The provision is administered by the Central Board of Direct Taxes (CBDT).
Official notifications are available on the Income Tax portal:
👉 https://www.incometax.gov.in
Overview of Crypto Tax Rules in India for FY 2024–25
For FY 2024–25, India’s tax framework for VDAs continues unchanged.
Key Highlights
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Flat 30% tax on all crypto gains
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1% TDS on crypto transactions above specified thresholds
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No deduction allowed except cost of acquisition
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No set-off or carry-forward of losses
Crypto profits are taxed at a special rate under Section 115BBH, irrespective of income slab or holding period.
Flat 30% Tax on Crypto Gains (Section 115BBH)
What Is Taxed at 30%?
Under Section 115BBH of the Income Tax Act, 1961, a flat 30% tax applies to profits from:
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Trading cryptocurrencies
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Selling crypto assets
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Using crypto to purchase goods or services
This applies regardless of:
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Your income slab
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Holding period (short-term or long-term)
A 4% Health & Education Cess is added to the tax payable, as applicable to all income taxes in India.
Allowed vs Disallowed Deductions
Allowed deduction
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Cost of acquisition only
Not allowed
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Exchange fees
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Transaction charges
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Internet or electricity expenses
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Any other business or personal expense
This structure makes India’s crypto taxation regime one of the most restrictive globally, as clarified in CBDT circulars available via the Income Tax Department.
1% TDS on Crypto Transactions (Section 194S)
When Does TDS Apply?
Under Section 194S, a 1% Tax Deducted at Source (TDS) applies when:
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Total crypto transaction value exceeds ₹50,000 in a financial year for most individuals
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Threshold reduces to ₹10,000 for specified categories
This rule applies irrespective of profit or loss.
Detailed guidelines on TDS compliance are published by the Income Tax Department:
👉 https://www.incometax.gov.in/iec/foportal/help/tds-on-virtual-digital-assets
Who Deducts the TDS?
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Indian crypto exchanges usually deduct TDS automatically
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In peer-to-peer (P2P) transactions, the buyer is responsible for deducting and depositing TDS
TDS deducted reflects in Form 26AS and can be claimed as credit while filing your ITR.
Losses in Crypto: What You Cannot Do
India’s crypto tax framework is particularly strict regarding losses.
You cannot:
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Set off crypto losses against crypto gains
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Set off crypto losses against salary, business, or capital gains
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Carry forward crypto losses to future years
Even if you incur a loss, 1% TDS still applies, as clarified under Section 194S.
Which ITR Form to Use for Crypto Income?
For FY 2024–25 (AY 2025–26), crypto income must be reported separately in updated ITR forms.
Use:
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ITR-2 – If you have crypto income along with salary, interest, or capital gains
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ITR-3 – If crypto trading is part of a business or profession
The updated ITR utilities and instructions are available on the official e-filing portal:
👉 https://www.incometax.gov.in/iec/foportal
Is Cryptocurrency Legal in India?
Cryptocurrency is not legal tender in India. However, the following activities are permitted:
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Buying crypto
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Selling crypto
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Holding crypto assets
Taxation does not imply legal currency status—it simply ensures tax compliance under Indian law.
Other Taxes on Cryptocurrency in India
Apart from income tax and TDS, crypto transactions may also involve:
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GST on exchange services and transaction fees, as clarified under GST law
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Disclosure under income-tax reporting requirements
The two core legal provisions governing crypto taxation remain:
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Section 115BBH
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Section 194S
Practical Tips for Crypto Investors in India
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Maintain detailed transaction records
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Track buy price, sell price, and dates
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Regularly reconcile TDS credits in Form 26AS
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Report every crypto transaction, even if there is no profit
Accurate disclosure reduces the risk of scrutiny, notices, and penalties from tax authorities.
Final Thoughts: Stay Compliant, Stay Informed
Cryptocurrency taxation in India for FY 2024–25 operates under a clear but stringent framework. With a flat 30% tax on gains, 1% TDS on transactions, and no loss adjustments, compliance is critical for every crypto investor.
Understanding the rules, maintaining proper records, and filing the correct ITR form will help you stay compliant while participating responsibly in India’s digital asset ecosystem.
