3 days ago
India’s 2025 Income Tax Act Sets Crypto Compliance Rules
India’s new Income-tax Act, 2025, keeps most crypto tax rules the same.
Profits from selling or transferring crypto are still taxed at a flat 30 percent.
A 1 percent tax may be deducted when certain crypto transactions happen, but this is an advance payment and not an extra tax.
Only the price paid to buy the crypto can be deducted from the gain.
Fees, internet costs, and losses from other crypto trades cannot be deducted under these rules.
Crypto exchanges must now send more information about users and transactions to the tax authorities.
This can include crypto trades, conversions, and transfers to personal wallets.
Investors should keep detailed records and report taxable transactions accurately in their tax returns.
The new law uses the term “Tax Year” instead of the older assessment-year terminology.
The 30% flat tax on virtual digital asset gains continues under Section 194(1), with only the section number changing.
The 1% tax deducted at source on VDA transfers continues under Section 393(1) and counts as advance tax credit.
Section 509 creates reporting duties for crypto exchanges and other service providers, including annual transaction-level reports through Form 167.
Only the acquisition cost of a VDA is deductible; trading fees and losses cannot be separately deducted, carried forward, or offset against other income.
Investors should preserve exchange statements, wallet histories, valuation records, TDS certificates, and transaction details for ITR reconciliation.
- Who
- Indian crypto investors, exchanges, brokers, dealers, custodial platforms, and tax authorities are affected.
- What
- The Income-tax Act, 2025, reorganizes crypto tax provisions, continues the 30% VDA tax and 1% TDS, and adds reporting requirements.
- Where
- The rules apply to crypto transactions and reporting in India, including activity on exchanges and transfers to self-custodied wallets.
- When
- The Act took effect on 1 April 2026; reporting will cover calendar-year 2026 transactions, with the first reports expected in 2027.
- Why
- The new framework is intended to organize crypto taxation and create a transaction-information trail for tax compliance.
Key facts
- VDA tax rate
- Gains from transferring virtual digital assets remain subject to a flat 30% tax.
- TDS rate
- The 1% TDS framework continues under Section 393(1); TDS is an advance tax credit.
- Deductible cost
- Only the acquisition cost of the VDA may be deducted.
- Loss treatment
- VDA losses cannot be set off against other income, other VDA gains, or carried forward.
- Exchange reporting
- Section 509 requires specified crypto service providers to report user and transaction information through Form 167.
- Reporting scope
- Reports can cover crypto-to-crypto trades, crypto-to-fiat conversions, and transfers, including transfers to external wallets.
- Terminology
- The new Act uses “Tax Year” instead of “Assessment Year” and “Previous Year” terminology.
Quotes
Prateek Gupta
Head of Business at Mudrex
“What goes dark is anything that happens after that, once the asset is sitting in a personal wallet with no exchange involved; that activity has no reporting trail at all. That’s the part investors under-document because it doesn’t feel like a taxable event the way a sale does.”
livemint.com
“The new Act represents more of a structural reorganisation of India’s crypto tax framework than a fundamental change in how crypto is taxed. The core provisions remain familiar to investors.”
livemint.com
Sources
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