*Crypto Taxation in India: What Every Investor Should Know*
By Vikram Subbura, CEO, Giottus.com
In India, crypto has matured from digital curiosities into assets that demand serious fiscal attention. Yet for many investors, the taxation landscape remains undecipherable. Let us take a systematic look at the tax implications and what the future might hold for investors.
Introduction: From Twilight to Taxation
Once shrouded in regulatory ambiguity, crypto in India now stands under the sunlit scrutiny of tax authorities. No longer a shadowy undercurrent, it has surfaced as a bona fide asset class—commanding stringent rules and shaping investor awareness.
The 2022 Turning Point
The watershed moment arrived with the 2022 Union Budget. For the first time, cryptocurrencies and related “Virtual Digital Assets” (VDAs) found a clear identity under Section 115BBH of the Income Tax Act. All profits from VDA transfers (including trades, conversions, and NFT dealings) were classified as taxable. A steep 30% flat tax (plus 4% cess and surcharge) was imposed, with only the cost of acquisition allowed as a deduction. There are no exemptions and no offsetting of losses.
TDS: A Silken Net of Compliance
Complementing the tax law was the introduction of 1% TDS, effective from July 1, 2022, applied to every transfer exceeding ₹10,000. This is regardless of whether a profit was made or not. The mechanism was simple yet powerful: a compliance net woven into every single transaction.
Crushing Clarity or Crushing Costs?
This regime brings clarity, but at the cost of flexibility. Traders cannot set off losses against other gains. Even purchase of crypto to pay for goods or swapping between coins attracts the same tax.
Rigorous Reporting: Schedule VDA
From FY 2025–26, Schedule VDA became mandatory in tax filings. This mandated that exchanges and investors alike must report all VDA transfers. The Income Tax Department isn’t just collecting numbers; it’s building a comprehensive digital ledger and non-disclosure is no longer an oversight. It entails real risk. The department recently initiated search-and-seizure actions for undisclosed crypto holdings, targeting taxpayers who skipped Schedule VDA.
The Road Ahead: Change on the Horizon
The crypto industry has urged tax rationalisation. In 2025, organisations like the Bharat Web3 Association and leading exchanges advocated reducing TDS to 0.1% instead of 1%, seeking a win–win that preserves traceability without choking liquidity. Since then, regulatory discussions have become more frequent.
Why It Matters: Beyond the Numbers
For India to harness web3 innovation and anchor the crypto economy, fiscal policy must balance oversight with encouragement. Onerous tax burdens risk pushing investors offshore—in fact, over 90% of Indian crypto trading is estimated to have migrated overseas due to excessive domestic tax friction.
Final Word: A Call for Balance
India’s crypto taxation, born in 2022, serves as a breakthrough in clarity. However, its rigidity could stifle growth. The next few years could usher in meaningful reform: scaled tax structures, loss offsetting, and a lower TDS.
At Giottus, we champion thoughtful evolution: a system that anchors accountability, nurtures innovation, and ensures India remains a global player in digital finance. After all, taxation should guide growth—not extinguish it.
