crypto tax in india 2025

1) What counts as “crypto” (VDA) under Indian tax law in 2025

Indian tax law uses the umbrella term Virtual Digital Asset (VDA). In simple words, this includes cryptocurrencies (like BTC, ETH, stablecoins), NFTs, and any other token the government may notify. The legal definition appears in Section 2(47A) and is summarized in official training material used by the Income-tax Department.

Bottom line: If you trade, swap, spend, gift, or otherwise transfer crypto/NFTs, you’re inside the VDA rules.

2) The golden rule: 30% tax on gains (no deductions, no set-off)

Since FY 2022-23, income from transfer of a VDA is taxed at a flat 30% under Section 115BBH. No expense deductions are allowed (except cost of acquisition). You cannot set off VDA losses against other income, and you cannot carry forward VDA losses to future years. Surcharge and 4% cess apply on top.

Plain English:

Profit = Sale price – (only) purchase cost.
No deduction for trading fees, internet, electricity, mining rigs, etc.
No setting off your crypto loss against salary, F&O, stocks, or even another crypto.

This harsh structure is confirmed in the government’s training slide deck (NADT) which explicitly lists no indexation, no Chapter VI-A deductions, no set-off across VDAs, and no carry-forward.

3) The 1% TDS (Section 194S): who cuts it, when, and thresholds

Separate from the 30% tax on gains, there’s a 1% TDS on consideration whenever a VDA is transferred. Think of this as a compliance trail: it’s collected at the time of the transaction and later reflected in your Form 26AS. The official tutorial (updated “As amended by Finance Act, 2025”) clarifies the rate is 1%, excludes GST/charges from the base, and lays out who deducts TDS in different scenarios (buyer, broker, or exchange).

Thresholds (per financial year):

₹10,000 for regular taxpayers
₹50,000 for a “specified person” (small taxpayers like many individuals/HUFs)
These thresholds are straight from the government tutorial.

No PAN? Then Section 206AA can jack TDS up to 20%. The same tutorial also notes Section 206AB’s higher-TDS rule was omitted w.e.f. 1-4-2025 (so no extra bump for non-filers from that section anymore).

Filing & deposit mechanics:

Specified person uses Form 26QE (challan-cum-statement) within 30 days of month-end.
Others deposit via ITNS-281 within 7 days (Mar deductions by Apr 30), and file Form 26Q quarterly.

4) Special situations: P2P, OTC, exchanges, and VDA-for-VDA

The official 194S tutorial maps responsibilities clearly:

OTC/P2P where buyer & seller deal directly: Buyer deducts TDS.
Through an exchange (fiat leg): The exchange usually deducts TDS when it pays the seller.
Through a broker: Broker or exchange deducts TDS per written agreement (Form 26QF reporting).
VDA-for-VDA swaps: Both legs are transfers, so TDS applies on both sides. Exchanges are allowed to withhold TDS in kind and later convert to INR using the CBDT-prescribed mechanism.

5) Gifts, airdrops, staking, mining: how they’re taxed

Gifts/airdrops received: If you receive VDAs for free or below FMV, they can be taxed on receipt under Section 56(2)(x) when the aggregate FMV over the year exceeds ₹50,000 (certain relative/occasion exemptions apply as with other properties). When you later sell that gifted token/NFT, the cost is the FMV at which you were taxed; the gain then gets hit with 30% under 115BBH. Government training material emphasizes the two-stage tax (receipt, then sale).
Staking rewards/mining outputs: Typically taxable income when received; later, on transfer, 115BBH’s 30% applies to sale proceeds minus acquisition cost (which can be the fair value when you first recognized them). Note: mining expenses aren’t deductible against 115BBH gains, and no indexation.

6) Record-keeping you actually need

Every trade: date/time, asset, quantity, INR value, counterparty/exchange, fees, TDS cut (txn-wise).
Gifts/airdrops: FMV on receipt + evidence (emails, on-chain txid, exchange notifications).
TDS proofs: Contract notes, Form 26AS reconciliation, 26QE/26Q acknowledgments where applicable.
Wallet transfers (self-custody): not taxable by themselves, but keep txids to prove it.
Cost basis: keep clean purchase proofs to avoid disputes over acquisition cost.

7) How to file: ITR schedules, forms, and where each number goes

For most individuals with VDA income and no business income, ITR-2 is used; if you also have business income, ITR-3 applies. The e-filing portal explains there’s a separate “Schedule VDA” where you disclose each VDA transfer and the portal computes the special 30% rate under 115BBH.

Tip: Reconcile your exchange “TDS deducted” entries with Form 26AS before filing so your refunds (if any) aren’t stuck.

8) Example calculations (2025 edition)

Assumptions: Surcharge/cess ignored in the illustrations to keep the math clean. In your actual return, add applicable surcharge and 4% Health & Education Cess.

A) Simple spot trade (profit)

Buy 0.02 BTC @ ₹5,000,00 = ₹100,000
Sell 0.02 BTC for ₹120,000 (exchange deducts 1% TDS on ₹120,000 = ₹1,200; you get ₹118,800)
Gain = 120,000 – 100,000 = ₹20,000
Income tax (115BBH) = 30% of 20,000 = ₹6,000 (+ cess)
TDS credit = ₹1,200 (visible in 26AS)
Net payable at return time ≈ ₹6,000 – ₹1,200 = ₹4,800 (+ cess)

B) VDA-for-VDA swap

Swap 1 ETH (FMV ₹250,000) for 7,500 USDT (FMV ₹250,000).
It’s two transfers; TDS @1% applies on both legs as per the exchange’s mechanism (often withheld in kind and converted to INR later).
Gain/Loss is computed separately for each asset vs. its cost. If your ETH cost was ₹200,000, then gain = 250,000 – 200,000 = ₹50,000, taxed @30%. The USDT acquired gets a cost basis of ₹250,000.

C) Gift received then sold

You receive 1 NFT as a gift (FMV ₹80,000). Since it exceeds ₹50,000 and is not from an exempt relative/occasion, ₹80,000 is taxable on receipt (other income).
Later you sell the NFT for ₹100,000. Under 115BBH, gain = 100,000 – 80,000 = ₹20,000, taxed @30%.

D) Loss case: no set-off

Buy 10,000 XYZ @ ₹5 = ₹50,000; sell the lot at ₹3 = ₹30,000; loss ₹20,000.
You cannot set this loss off against anything (including salary, F&O, or other crypto gains), and cannot carry it forward. It simply dies there.

9) Penalties, interest & common mistakes

TDS non-compliance can get expensive. The official tutorial lists consequences:

Interest: 1% per month for failure to deduct, 1.5% per month for failure to deposit after deduction.
Penalties & prosecution: Sections 271C, 221, 276B may apply; late/non-filing of TDS statements attracts 234E fees (₹200/day, capped at TDS), plus 271H penalties.
TDS certificates (Form 16A/16E) delays also carry per-day penalties.

Most common user mistakes:

Thinking exchange-cut TDS pays the entire tax (it doesn’t; it’s just 1%).
Claiming expenses against 115BBH gains (not permitted).
Not reporting VDA-for-VDA swaps (both sides are taxable transfers).
Missing P2P/OTC TDS obligation as a buyer.
Failing PAN or filing history → risking higher TDS (up to 20% without PAN).

10) GST on fees and charges (what applies, what doesn’t)

India doesn’t levy GST on the value of the crypto you transfer; however, platform fees/brokerage and other service charges generally attract GST (commonly 18%). Multiple finance outlets in 2025 note the continued impact of GST on exchange/platform fees alongside the 30% income tax and 1% TDS. Always check your contract notes to see GST applied on fees (not on the coin value).

11) NRIs, HUFs, firms & companies: anything different?

NRIs: 115BBH applies to resident and non-resident alike on India-taxable VDA transfers. Withholding for non-residents may be under Section 195 (pay attention to situs, payer residency, and DTAA where relevant). The 194S tutorial flags that if the recipient is non-resident, 195 could apply instead.
HUFs, firms, companies: Same 30% special rate on VDA transfers. The TDS thresholds differ only for “specified person” (often an individual/HUF with small turnover or no business income), per the tutorial definition—others get the lower ₹10,000 threshold.

12) What changed (and didn’t) for 2025 + policy chatter

Still in force for FY 2024-25 (AY 2025-26): 30% tax on VDA gains, 1% TDS, no set-off/carry-forward, no deductions (beyond cost), separate Schedule VDA in ITR, thresholds of ₹10,000/₹50,000, PAN-based 20% TDS risk under 206AA. Official pages and tutorials updated through Finance Act, 2025 confirm these mechanics.
What’s being discussed: In mid-2025, reputed outlets reported industry-government talks about possibly reducing TDS (industry has pitched 0.1%) and allowing some loss set-off to stem offshore migration. As of August 27, 2025, these are discussions only—no change enacted yet. Keep an eye on CBDT announcements and the next Budget.

13) Quick compliance checklist (FY 2024-25)

□ Track every crypto transfer (including swaps) with INR values.
□ Ensure TDS @1% was properly handled for each eligible transfer. If you’re the buyer in a P2P, you may have to deduct/file yourself.
□ Reconcile exchange TDS and your Form 26AS.
□ Prepare Schedule VDA with transaction-wise details in ITR-2/3.
□ Don’t claim ineligible deductions or loss set-offs.
□ File TDS forms (26QE/26Q) and deposit on time where you were the deductor.
□ Keep gift/airdrop FMV proofs and staking/mining logs.

14) FAQ (straight answers)

Q1) Is crypto taxed at slab rates or 30%?
A: 30% flat on gains from transfers under 115BBH, plus surcharge & 4% cess. Not slab.

Q2) Can I deduct brokerage or gas fees from my profits?
A: No general deductions. Only cost of acquisition counts under 115BBH.

Q3) I made overall losses in crypto this year—can I adjust or carry forward?
A: No set-off against other income or other crypto, and no carry-forward.

Q4) Who cuts the 1% TDS?
A: Depends on the flow: buyer in OTC/P2P; often the exchange in standard exchange trades; or broker per agreement. Swaps trigger TDS on both legs.

Q5) What if I don’t provide my PAN?
A: TDS can shoot up to 20% under Section 206AA. Don’t do that.

Q6) Do I need to file anything special in the ITR?
A: Yes—Schedule VDA in ITR-2/3 captures transaction-wise details; the portal levies the 30% rate automatically on that schedule.

Q7) Are crypto platform fees subject to GST?
A: Service fees charged by platforms typically attract GST (commonly 18%). That’s on fees, not on the asset’s principal amount.

Q8) I’m an NRI—does 115BBH still apply?
A: Yes, 115BBH applies to VDA transfers that are taxable in India. Withholding for NR recipients may be under Section 195.

15) TL;DR cheatsheet

30% tax on VDA gains (no deductions beyond cost, no set-off/carry-forward).
1% TDS on transfers (threshold: ₹10k normal / ₹50k specified person). Buyer/exchange/broker deducts depending on flow; swaps: TDS on both legs.
PAN missing? TDS can be 20% (206AA). 206AB extra rate omitted from 1-4-2025.
Gifts/airdrops can be taxed on receipt (56(2)(x)), then 30% on sale gain.
ITR filing: Use Schedule VDA in ITR-2/3; reconcile TDS in 26AS.
Policy watch (Aug 27, 2025): Talks about reducing TDS/allowing loss set-off, but no changes enacted yet.

Sources (key official & reputable references)

Income-tax Dept. Tutorial on Section 194S, “TDS on payment for transfer of VDAs,” As amended by Finance Act, 2025 (rates, thresholds, who deducts, PAN @20%, omission of 206AB, forms & penalties). Income Tax India
ITR-2 FAQ (official portal): confirms 30% VDA taxation & Schedule VDA usage. Income Tax Department
NADT training slides on VDA taxation: no deductions (beyond cost), no set-off/carry-forward, gifts under 56(2)(x), no indexation. nadt.gov.in
Reputable finance media on GST on platform fees and the 2025 compliance climate. Business Today
2025 coverage of industry-government talks on possible TDS/loss-set-off changes (not enacted as of today). Financial Times The Economic Times The Times of India