India's Union Budget 2025 retains a 30% flat tax on profits from cryptocurrencies, alongside a 1% Tax Deducted at Source (TDS) applied to all VDA transactions above 10,000 rupees. This budget introduces mandatory reporting for cryptocurrency transactions in a dedicated Income Tax Return section called Schedule VDA, enhancing transparency. However, the regime poses significant challenges such as stringent reporting requirements, penalties for inaccuracies, and no allowances for deductions or loss offsets. From February 2025, underreported gains can be taxed at 60% during raids. Additionally, many Indian traders have shifted to offshore exchanges due to the 1% TDS on transactions, which has led to substantial revenue losses for the Indian government. The high tax burden is seen as detrimental, with local exchanges struggling under these regulations, resulting in notable market declines. Comparatively, India’s tax regime is one of the strictest globally, treating crypto more like gambling rather than investments, contrasting sharply with more favorable countries like Singapore or Dubai, which attract investors through lenient tax policies.

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