📌 Introduction: The Rise of Crypto Taxes in India
In a groundbreaking disclosure, the Government of India confirmed it collected ₹437.43 crore in income tax from cryptocurrency transactions during FY 2023–24, marking a 63% rise over the ₹269.09 crore collected in FY 2022–23. This surge reflects both increased crypto activity and improved tax compliance measures.
For Manika TaxWise readers—beginners, investors, and casual users—this detailed article unpacks how India's crypto tax framework works, what drove the spike in revenue, and what it means for you.
1. How Crypto Tax Rules Evolved in India
🏛 Background: Legal Treatment of Digital Assets
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Crypto assets are legally classified as Virtual Digital Assets (VDAs) under Section 2(47A) of the Income Tax Act
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From April 1, 2022, any gains from transferring VDAs are taxed at a flat 30% rate under Section 115BBH, regardless of holding period, type of gain, or investor type
TDS Introduction
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Starting July 1, 2022, a 1% Tax Deducted at Source (TDS) (Section 194S) applies on every VDA transaction exceeding ₹10,000 or ₹50,000 depending on scenarios, irrespective of profit or loss
Budget 2024‑25: No Change
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The 2024‑25 Union Budget retained both the 30% VDA tax and the 1% TDS with no reduction, despite industry campaigns
2. Surge in Tax Collections: What Changed?
| FY Period | Crypto Income Tax Collected | YoY Growth |
|---|---|---|
| FY 2022–23 | ₹269.09 crore | — |
| FY 2023–24 | ₹437.43 crore | +63% |
Reasons for Growth:
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Wider reporting compliance and more taxpayer awareness.
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The Income Tax Department (ITD) now uses AI and data analytics to detect mismatches between transaction data from exchanges and ITR filings. Notices are issued if discrepancies exceed ₹1 lakh (~USD 1,200)
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Training and enforcement efforts by the tax department have improved VDA tax tracking
3. Key Elements of Crypto Tax in India
A. Who Pays the 30% VDA Tax?
Any seller or user of VDAs:
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Selling crypto for INR or other currencies
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Crypto-to-crypto trades, including stablecoins
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Spending crypto on goods/services
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Gifts or airdrops—taxed at receipt or upon disposal
Losses cannot be offset against gains from other VDAs or other income – no carry‑forward allowed
B. 1% TDS (Tax Deducted at Source)
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Deducted even if the trade books a loss, based on sale value, not profit.
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TDS applies to transactions above ₹10,000/₹50,000 thresholds and must be reported during ITR filing
C. Reporting & Compliance
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Crypto gains must be declared under the new Schedule VDA in your ITR form.
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Failure to disclose can lead to notices, search and seizure, and even confiscation of hardware wallets
D. Gift, Airdrop & Mining Income
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Crypto gifts are treated as income in the receiver’s hands and taxed at 30%.
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Airdrops: taxed as "other income" at receipt, then taxed again at 30% if sold.
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Mining proceeds are not taxed until sold; income gets taxed at the point of sale as business income plus TDS rules
4. Practical Examples: How Tax Works
Example 1: Trading & Selling
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You bought crypto for ₹1,00,000 in 2023. Sold it for ₹1,50,000 in FY24.
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Gain = ₹50,000
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Tax = 30% of ₹50,000 = ₹15,000 (plus cess/surcharge)
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TDS = 1% of ₹1,50,000 = ₹1,500, deducted at source
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Net tax to pay: ₹13,500 via ITR
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Example 2: Airdrop
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Received tokens worth ₹10,000 as an airdrop.
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Taxed as other income at 30% → ₹3,000.
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If you later sell those tokens at ₹15,000, additional 30% tax applies on ₹5,000 gain.
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5. What the ₹437 Crore Means to You
For First‑Time Investors:
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These figures show the government is taking crypto taxes seriously—report everything.
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If your transactions exceed thresholds, exchanges may auto‑deduct TDS.
For Frequent Traders & Hobbyists:
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Even minor profits are taxable—no exemption for long‑term holding.
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Every sale, swap, or expenditure of crypto must be tracked and reported.
Investor Tips:
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Keep records of date, amount, and mode (crypto/INR) of each transaction.
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Use tools or consult with a CA to calculate gains/losses.
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Ensure crypto income is accurately reported in Schedule VDA of ITR.
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Monitor TDS certificates from exchanges.
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If you receive IT notices—respond quickly and correct discrepancies to avoid penalties.
6. Why This Matters for Policy & Industry
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Industry remains concerned that steep taxation (30% + 1% TDS) is driving Indian crypto activity offshore—over 90% of volume shifted abroad since 2022
Despite lobbying, tax relief did not materialize in Budget 2025. However, the government is exploring Crypto‑Asset Reporting Framework (CARF) adoption for transparency and compliance The Economic Times.
✅ Conclusion
India’s collection of ₹437 crore in crypto taxes during FY 2023–24 marks a pivotal moment in the nation's fiscal journey with digital assets. With clear tax rules in place, enhanced enforcement via AI and analytics, and ever‑rising collections, PDF investors and users must now take crypto taxation seriously.
Manika TaxWise encourages you to stay informed, stay compliant, and treat crypto transactions with the same diligence as traditional income—because the taxman certainly is.
🔍 FAQs
Q1: What triggered the surge to ₹437 cr crypto tax collections?
A: A 63% YoY increase, driven by stronger compliance, widening taxpayer awareness, and better tracking by tax authorities using data analytics and AI
Q2: Does loss from crypto reduce my tax liability?
A: No. Losses from VDAs cannot be set off against other income or capital gains and cannot be carried forward
Q3: When does the 1% TDS apply?
A: On VDA transactions exceeding thresholds, including if sold at a loss. It’s deducted on sale value and can be claimed in ITR
Q4: What if I don’t report crypto income in my ITR?
A: The IT dept may issue notices, conduct search & seizure, and confiscate hardware wallets. Always report gains in Schedule VDA
Q5: Are any changes coming to crypto tax in Budget 2025?
A: No changes were made. Current rates remain: 30% flat income tax and 1% TDS. Some new reporting frameworks like CARF are being explored
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