India Introduces Tax and Compliance Requirements for Cryptocurrencies

India has made significant strides in regulating its cryptocurrency landscape, with the introduction of tax and compliance requirements. As outlined in the India Crypto Complete Handbook 2026, Virtual Digital Assets (VDAs) are now subject to a flat 30% tax, while exchanges must carry out reporting burdens. This move is part of the government's efforts to bring cryptocurrencies within the purview of existing laws.

The Income Tax Act, 2025, has been amended to cover VDAs under its provisions. This means that gains from transferring a VDA are subject to a flat 30% tax, regardless of the holding period or income slab. A 1% Tax Deducted at Source (TDS) kicks in when VDA transfers exceed ₹50,000 in a financial year, or ₹10,000 for specified persons.

The Financial Intelligence Unit-India (FIU-IND) also plays a crucial role in regulating VDAs. Covered service providers must meet applicable reporting requirements, and offshore providers serving Indian users may be subject to similar regulations. This includes registering as reporting entities and carrying out customer due diligence.