In the financial year 2024-2025, cryptocurrencies in India are classified as virtual digital assets (VDAs) under the Income Tax Act, 1961. Traders are subject to a flat 30% tax on gains and a 1% tax deducted at source (TDS) on all transfers. Taxable events include trading, staking rewards, airdrops, hard forks, mining income, and payments in crypto, while holding assets without action is non-taxable. Income from cryptocurrencies can be categorized as business income or capital gains, with both taxed at 30%. The TDS applies to transactions exceeding 50,000 rupees, ensuring compliance across crypto platforms. Traders must accurately calculate their taxes, report transactions using required forms, and maintain thorough records. Non-compliance may lead to penalties. Challenges include navigating unclear regulations for DeFi and NFTs, tracking trades across various platforms, and dealing with lost or stolen assets. From FY 2025-26, the new Schedule VDA requires detailed reporting for each crypto transaction, emphasizing the importance of timely and accurate filings.

Source 🔗