In Budget 2025, the Indian government has made no changes to the taxation of cryptocurrencies like Bitcoin and Ethereum. Cryptocurrency transactions will continue to be taxed at the same rate, as per the Finance Act 2022. This means that, for FY 2025-26 (Assessment Year 2026-27), the taxation rules established in 2022 will remain in place. Here’s everything you need to know about how cryptocurrencies are taxed in India, including TDS rules and how to report your crypto income.
The taxation of Virtual Digital Assets (VDAs), which includes cryptocurrencies, remains unchanged. Under the Finance Act 2022, the income tax on crypto transactions is set at a flat 30%, along with the applicable surcharge and cess.
Key Points on Cryptocurrency Taxation:
- 30% tax on gains from selling cryptocurrencies
- No deductions allowed for transaction fees or other costs—only the cost of acquisition is deductible
- Losses from VDAs cannot be offset against other income or gains
This flat tax applies to both individual and business transactions, ensuring that crypto assets remain highly regulated in India.
TDS on Cryptocurrency Transactions
A crucial provision that continues from Finance Act 2022 is TDS (Tax Deducted at Source) on cryptocurrency transactions. Here’s what you need to know:
- 1% TDS applies to cryptocurrency transactions.
- Threshold for salaried individuals: Rs 10,000 per transaction.
- Threshold for businesses: Rs 50,000 per transaction.
These rules aim to ensure that tax is deducted at the source when cryptocurrencies are bought or sold, making it easier for authorities to track transactions and ensure compliance.
How to Report Crypto Income
It’s essential for individuals involved in cryptocurrency trading to report their income accurately in their annual income tax returns (ITR). You must use ITR-2 or ITR-3 forms (not ITR-1), as these include the Schedule VDA specifically for Virtual Digital Assets.
When filling out the Schedule VDA, you’ll need to provide key details such as:
- Date of acquisition
- Date of transfer
- Cost of acquisition
- Consideration received
Important: Failure to report crypto income correctly can lead to penalties and interest charges, especially if taxes are underpaid.
Relief from Penalties for TDS Filing Delays
The Central Board of Direct Taxes (CBDT) has offered penalty relief for taxpayers who missed filing Form 26QE for TDS on cryptocurrency transactions between July 1, 2022, and February 28, 2023. If you filed Form 26QE by May 30, 2023, the penalty and interest charges on delayed TDS filing will be waived for that period.
The taxation framework for cryptocurrencies in India remains consistent as per the Finance Act 2022, with no major changes announced in Budget 2025. Investors and traders should ensure they comply with the TDS requirements and report their crypto income accurately to avoid penalties. Stay informed about these tax rules to ensure smooth compliance and avoid surprises during tax season.
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