India’s Union Budget 2025 has made no changes in the existing tax rules for cryptocurrencies, maintaining the provisions of the Finance Act 2022 for virtual digital assets (VDAs) like Bitcoin (BTC) and Ether (ETH).
Under Section 115BBH of the Income Tax Act, profits from selling VDAs are taxed at a flat rate of 30%. You can deduct only the purchase cost, with no allowance for other expenses or losses.
Additionally, a 1% Tax Deducted at Source (TDS) applies to all VDA transactions above 10,000 Indian rupees (about $115), deducted from either the seller or buyer to support ongoing monitoring efforts. A 4% cess is also levied on the crypto tax rates. This cess applies to the total tax liability (30% surcharge, if applicable), not as a standalone tax on crypto transactions.
However, the Union Budget 2025 has established a new system for reporting cryptocurrency transactions. For the financial year (FY) 2025-26, individuals and businesses dealing with VDAs must declare their crypto profits in a specific section of the Income Tax Return (ITR) called Schedule VDA.
This section is designed to simplify tax reporting for cryptocurrencies and enhance transparency. Moreover, it has become mandatory for crypto exchanges and other platforms involved in VDA transactions to provide detailed reports to tax authorities to ensure compliance and avoid penalties.
Section 158B of the Indian Income Tax Act does not directly deal with crypto taxation. Still, it becomes relevant in cases where unreported crypto assets or gains are discovered during search and seizure operations by tax authorities. The Union Budget 2025 introduced this amendment, subjecting unreported cryptocurrency gains to block assessments and treating them similarly to traditional assets such as cash, jewelry and bullion for tax purposes.
