Cryptocurrency and VDA Tax in India 2025 — 30% Tax, 1% TDS and ITR Filing

India introduced a specific tax framework for Virtual Digital Assets (VDAs) — which includes cryptocurrencies, NFTs and other digital tokens — effective from FY 2022-23. The rules are strict, the tax rate is high, and there is zero flexibility on loss set-off. If you trade or invest in crypto in India, here is everything you must know about tax compliance in 2025.

What is a Virtual Digital Asset (VDA)?

Under Section 2(47A) of the Income Tax Act, a VDA includes: any information, code, number or token (not being Indian or foreign currency) generated through cryptographic means or otherwise, providing a digital representation of value — i.e., Bitcoin, Ethereum, Solana, NFTs, and any other cryptocurrency or token. It does NOT include gift cards, mileage points or gaming tokens.

30% Tax on VDA Gains — Section 115BBH

Income from transfer of any VDA is taxed at a flat 30% + 4% cess = 31.2% regardless of your income level, holding period or type of VDA. This is the highest flat rate in India — no indexation, no long-term capital gains benefit, no exemption.

• Sale of Bitcoin for ₹5 lakh (purchased at ₹3 lakh) → Gain: ₹2 lakh → Tax: ₹62,400
• Cost of acquisition (purchase price in INR) is the only deductible expense
• Mining costs: deductible only cost of acquisition (mining cost of the specific asset)
• Transfer charges, gas fees: the law is silent — most practitioners do NOT deduct these

No Set-Off of VDA Losses

VDA losses CANNOT be set off against any other income (salary, business, other capital gains). VDA losses from one VDA also CANNOT be set off against gains from another VDA. Each VDA transaction stands alone. This is unique and harsher than any other capital asset in India.

1% TDS on VDA Transfers — Section 194S

Any person paying consideration for transfer of a VDA must deduct TDS at 1% if the aggregate value exceeds ₹50,000 (₹10,000 for non-specified persons) in a financial year. Indian crypto exchanges (CoinDCX, WazirX, Zebpay, etc.) deduct this 1% TDS on every sell transaction and deposit it to the government. This TDS is visible in your Form 26AS/AIS and is creditable against your tax liability.

ITR Filing for VDA Income

VDA income must be declared in Schedule VDA of ITR-2 or ITR-3. You must report each sale/exchange transaction — date of acquisition, date of transfer, cost and consideration. Aggregating all transactions is advisable. ITR-1 cannot be used if you have VDA income.

GST on Crypto

Currently, there is no clarity on GST applicable to crypto trading in India. Crypto exchanges pay GST on their service fees/commissions. The classification of crypto as goods vs service vs neither remains legally contested.

Conclusion

Cryptocurrency taxation in India is straightforward in structure but harsh in application — 30% flat tax, no loss set-off, and mandatory 1% TDS. SPOTON provides complete VDA tax compliance services including transaction aggregation, Schedule VDA preparation and ITR filing. Contact us for expert crypto tax advisory.