Cryptocurrencies have caught the attention of many people in India looking for new ways to invest and transact. With this rise in popularity, authorities have stepped in to create rules that help track these activities. The goal is to build a system where transactions are clear and everyone follows the same guidelines.
Recent figures highlight how this oversight is playing out through tax collections. The total tax deducted at source, or TDS, on virtual digital assets climbed to ₹511.83 crore during the 2024-25 fiscal year. That’s a notable 41% jump from the ₹362.70 crore collected the year before.
Exchanges based in Maharashtra contributed the most, with ₹293.40 crore in crypto TDS. Karnataka followed at ₹133.94 crore, and Gujarat added ₹28.63 crore. Keep in mind, these numbers tie to where the platforms are located, not where users make their trades.
Delhi ranked fourth, pulling in ₹28.33 crore—a sharp rise from just ₹0.99 crore previously. Growth rates varied: Karnataka saw a 63.4% increase, Maharashtra 30.63%, while Gujarat dipped by 2.3%.
Other areas showed smaller amounts. Rajasthan collected ₹15.48 crore in crypto TDS, and Tamil Nadu ₹9.97 crore. Many states reported very low figures, under ₹1 crore, or none at all.
This 1% TDS rule kicked in on July 1, 2022, after the 2022-23 Union Budget made it required for all virtual digital asset transfers.
Officials note that local service providers mostly stick to these rules, but some foreign platforms serving Indian users face checks for skipping them. By November 2025, 47 providers had registered with the Financial Intelligence Unit-India.
The government has also targeted 18 exchanges over GST evasion totaling more than ₹824 crore. Plus, through the CBDT’s NUDGE program, over 44,000 messages went out to people who traded or invested in these assets but didn’t report them on tax returns.
Higher crypto TDS collections point to more people getting involved with digital assets across India. It shows the market is expanding, especially in key states. For everyday investors, this means the system is getting better at spotting unreported activity, which could lead to fewer surprises during tax time.
A stronger focus on compliance helps curb risks like money laundering. It also builds trust in the space, making it safer for newcomers.
How Crypto TDS Works in India
The rule came about because transactions in virtual digital assets were booming. Finance Minister Nirmala Sitharaman explained in the 2022 budget that their scale called for dedicated taxes.
Essentially, a 1% deduction happens right at the transfer point. This captures details on each deal, alongside a 30% tax on any profits from them.
It’s part of broader efforts under the Prevention of Money Laundering Act. Providers, whether local or foreign, must register if they serve Indians to fight illicit finance.
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