India's 2025 Crypto Tax Policy Explained – Complete Guide for Traders & Investors

Crypto Tax India 2025: Everything You Need to Know About New Rules

Cryptocurrency has become a buzzword among Indian investors, and 2025 is proving to be a defining year. With increasing global adoption and rising digital asset prices, the Indian government has taken clear steps to strengthen regulations and tax compliance for crypto holders.

Whether you trade Bitcoin, invest in altcoins like Ethereum and Solana, mint NFTs, or earn staking rewards — understanding the current crypto tax framework is essential in 2025. This guide will help you understand how crypto income is taxed in India, what the TDS means, how to file crypto in ITR, and the key dos and don'ts to stay tax compliant.

1. Quick Overview of Current Crypto Tax Structure in India (2025)

India officially began regulating crypto taxation in February 2022 when it introduced the term Virtual Digital Assets (VDAs). Since then, several provisions have evolved. Here's what applies as of July 2025:

• Flat 30% tax on any gains from crypto assets, with no deductions allowed except the cost of acquisition.
• 1% TDS (Tax Deducted at Source) on every crypto transaction, applicable to both buyers and sellers.
• No set-off of losses from crypto against any other income like salary, business, or capital gains.
• Reporting of crypto holdings in Income Tax Return (ITR) under a dedicated Schedule VDA.
• Gifting of crypto is taxable under "Income from Other Sources" if it exceeds ₹50,000.

These policies apply not just to exchanges, but also to peer-to-peer (P2P) trades, DeFi platforms, and NFT marketplaces.

2. Key Definitions You Must Know in 2025 Crypto Taxation

Before diving deeper, let’s get familiar with the key terms used in the Indian crypto tax structure of 2025:

• Virtual Digital Asset (VDA): This includes cryptocurrencies (like Bitcoin, Ethereum), NFTs (Non-Fungible Tokens), and any other digital assets as notified by the government.
• Transfer: Selling, exchanging, gifting, or otherwise transferring ownership of a crypto asset.
• Income from VDAs: Any profit or gains arising from transfer of VDAs are taxed under the head ‘Income from Other Sources’.

Understanding these definitions will help you comply with legal reporting and avoid penalties.

3. Reporting Crypto in ITR: Schedule VDA in 2025

The Income Tax Return (ITR) forms for Assessment Year 2025-26 include a new section named Schedule VDA, specifically for declaring profits/losses from cryptocurrencies and other VDAs.

You need to report:

• Date of acquisition
• Date of transfer
• Name of crypto asset (e.g., Bitcoin, Shiba Inu)
• Purchase and sale price
• TDS deducted (if any)
• Net income or loss

💡 Tip: Even if you incurred a loss in crypto, you must report it in Schedule VDA.

4. What is the TDS Rule on Crypto?

As per Section 194S of the Income Tax Act, a 1% TDS (Tax Deducted at Source) applies to any crypto transaction exceeding ₹10,000 (or ₹50,000 in some cases).

For example:
If you sell Bitcoin worth ₹1,00,000, the exchange or buyer must deduct ₹1,000 as TDS before paying you.

TDS is applicable to:

• Peer-to-peer (P2P) trades
• Crypto-to-crypto swaps
• NFT transactions (if they qualify as VDAs)

✅ You can later claim TDS credit when filing your ITR.

5. Can You Set Off Crypto Losses?

❌ Sadly, no. As per Section 115BBH:

• Losses from one VDA cannot be set off against profits from another.
• You also cannot carry forward crypto losses to future years.

This makes crypto taxation in India more rigid compared to stocks or mutual funds.

6. Gifting of Crypto: What You Need to Know

Gifting cryptocurrency is also considered a transfer under tax laws.

Rules to remember:

• If the gift exceeds ₹50,000 and is not from a relative, it's taxable in the receiver’s hands.
• Gifts during marriage, inheritance, or from close relatives are usually tax-exempt.

📄 Keep records of wallet transfers, transactions, and PAN details of the sender/receiver.

7. Penalties for Non-Compliance in 2025

If you fail to report your crypto gains:

• You may face a penalty up to 200% of the tax due.
• Interest under Section 234A/B/C.
• In extreme cases, prosecution for tax evasion.

So, even if you're a casual investor, proper filing is critical in 2025.

8. Which ITR Form Should Crypto Investors Use?

Depending on your overall income:

• ITR-2: For salaried individuals with capital gains and crypto
• ITR-3: For people with business income (frequent trading, full-time investors)
• ITR-4: For presumptive taxpayers (with very small crypto earnings)

Make sure the form you choose includes Schedule VDA.

9. Which Platforms Report Your Crypto Trades?

Major Indian exchanges now report your crypto activity to the Income Tax Department via your PAN:

• CoinDCX
• WazirX
• CoinSwitch
• ZebPay
• Giottus

🚨 This means: Even if you skip declaring crypto income, the government may already know through your Annual Information Statement (AIS).

10. How to Save Tax on Crypto in India (Legally)

Want to reduce your crypto tax burden without breaking the law? Here are a few smart ways:

• Book profits in smaller chunks to keep TDS lower
• Hold for the long-term instead of frequent trades
• Gift crypto within your family circle to avoid taxation
• Trade on global platforms (if fully compliant with FEMA & RBI)

⚠️ Always consult a qualified CA or tax advisor before applying these methods.