For the financial year 2024-2025, Indian tax law treats cryptocurrencies as virtual digital assets (VDAs) under the Income Tax Act, 1961. Section 2(47A) spells out what that means: Any code, number, token or piece of information created through cryptography counts as a VDA. The only exception is money itself — Indian rupees or any other country’s fiat currency.
VDAs include cryptocurrencies like Bitcoin (BTC) and Ether (ETH), as well as non-fungible tokens (NFTs) and similar digital tokens. While it is legal to buy, sell and hold VDAs, they are not recognized as valid payment methods.
In other words, crypto operates in a legally ambiguous space in India in 2025. It is permitted but closely monitored for taxation and anti-money laundering (AML) purposes.
Several agencies in India oversee crypto transactions. The Income Tax Department enforces tax compliance, guided by the Central Board of Direct Taxes (CBDT) under the Ministry of Finance, which sets tax policies.
Meanwhile, the Financial Intelligence Unit (FIU-IND) ensures platforms meet AML standards, while the Reserve Bank of India (RBI) and the Securities and Exchange Board of India (SEBI) shape broader regulatory policies.
These bodies work together to oversee crypto taxation in the country.
The Income Tax (No. 2) Bill, 2025, received presidential assent on Aug. 22, 2025, thereby replacing the Income Tax Act, 1961.
