🔍 India continues its tough stance on crypto, maintaining high taxes while adding new compliance rules and harsh penalties. Here's a breakdown of the latest updates as of FY 2025–26:
• 💸 30 % tax on profits from all virtual digital assets (VDAs), including NFTs, equating crypto gains to income from gambling — with no loss offsets or holding period benefits
• ➕ 4% health & education cess plus applicable surcharges
• ✂️ 1% Tax Deducted at Source (TDS) on crypto transfers above ₹10,000/year as advance tax (not a replacement for final tax)
• 📄 Mandatory declaration of crypto gains in Schedule VDA using ITR-2 (capital gains only) or ITR-3 (business income)
• ⚠️ From Feb 1, 2025: 70% penalty tax on undisclosed crypto assets, no deductions allowed
• 📦 Crypto gifts over ₹50,000, airdrops, forks, mining/staking income are taxable; wallet-to-wallet transfers under same owner are exempt
📉 Market Impact & 🚨 Enforcement
• Trading volumes dropped by up to 90% as investors move offshore
• Crypto Centralized Exchanges fined heavily for GST (Goods and Services Tax) evasion
• Income Tax Dept actively issuing notices and conducting raids, including on P2P traders
• Example: Trader fined ₹78,000 for ₹1,500 profit due to missing KYC compliance
🧠 Tips for Crypto Users in India
• 🧾 Track every crypto transaction — including buys, sells, transfers, and receipts
• 🛠️ Use tax tools like ClearTax, Koinly, or exchange-provided reports to ensure accuracy
• 📄 File the correct ITR form (ITR-2 or ITR-3) and complete Schedule VDA properly
• 🎁 Report even small airdrops, gifts, or forks to reduce audit risk
• ⏰ Don’t delay — penalties for non-compliance are steep and enforcement is increasing
• ⚖️ Consult a qualified tax professional or crypto-savvy tax lawyer to stay fully compliant and handle complex cases confidently
✅ Bottom line:
India’s crypto tax framework is fully in force—with high taxes, mandatory reporting, and strong enforcement. Retail adoption has declined, compliance burdens are increasing, and enforcement actions are well underway. Individuals and exchanges should act swiftly to ensure full compliance or face steep penalties.