In the current scenario of growing crypto activity in India, the Finance Ministry reported that ₹437.43 crore was collected as income tax on Virtual Digital Assets (VDAs) during the financial year 2023–24.
This is a sharp 63% rise from the ₹269.09 crore collected in FY23. The data was revealed by Minister of State for Finance Pankaj Chaudhary during a written response in the Lok Sabha on the first day of the Monsoon Session.
The tax gains underscore the expanding footprint of digital assets and the government’s tightening grip on the sector.
What the VDA Tax Covers
The government introduced a flat 30% tax on gains from cryptocurrencies and other VDAs starting April 1, 2022.
This includes income from the sale of cryptocurrencies, NFTs (non-fungible tokens), and other blockchain-based tokens. Further, the tax applies irrespective of whether the gains are short-term or long-term, with no deductions allowed apart from the cost of acquisition.
In addition to this, a 1% TDS (Tax Deducted at Source) on transactions was also implemented from July 1, 2022. This ensures that crypto exchanges deduct tax at the point of sale and report it to the government.
Growing Compliance and Revenue
The latest tax figures suggest more people are reporting crypto gains. This could be due to better compliance, improved traceability, and the increased awareness of legal obligations after the new tax rules came into force.
It’s also a reflection of the high volume of trades happening despite a global slowdown in crypto markets during 2023. Indian users, especially young investors, continue to remain active in digital asset markets.
Future Revenue Potential
The ministry also noted that data for FY25 is not available yet. As the due date for filing income tax returns is not over. However, with improving reporting mechanisms and government scrutiny, collections are expected to rise further.
The upward trend in revenue also gives the government a strong reason to continue regulating and taxing the sector in a more structured way.
A Step Towards Regulation
India’s approach to crypto has long been cautious. With no clear law yet, the tax regime is being used to bring some degree of control.
Taxation, especially the 1% TDS, has been seen as both a revenue tool and a mechanism to monitor transactions. Crypto exchanges must now register with authorities and report user data to ensure traceability.
For global context, digital asset taxation is a common regulatory path, and India’s model mirrors Western countries that began with tax enforcement before legalising or banning certain tokens.
Industry Response to the Crypto Tax
Crypto industry players have mixed reactions to the tax collection update.
While some see it as a sign of maturity in the Indian market. Others argue that high tax rates discourage innovation and drive talent overseas.
Many continue to lobby for lower capital gains tax, or at least the ability to offset losses. Also, something that’s currently not allowed under India’s tax framework for VDAs.
Indian exchanges such as CoinDCX and WazirX have been urging the government to ease the burden, especially on retail investors and startups.
Several international firms are also waiting for clearer rules before entering the Indian market.
Crypto Adoption vs. Regulation
Despite the taxation hurdles, India’s youth continue to experiment with blockchain, Web3, and digital tokens.
However, without proper regulation, the ecosystem remains vulnerable to scams, rug pulls, and misuse. Taxation helps formalise the industry but is not a substitute for full legislation.
The government is also working with international bodies like the G20 and IMF to develop a global framework for crypto governance, especially with AI and digital trade becoming central to future economies.
What’s Next?
With income tax collections rising and more data coming in from exchanges, the government is expected to tighten its compliance net further.
Meanwhile, stakeholders hope that rising revenue from VDAs will encourage the government to introduce balanced regulations that promote innovation while protecting users.
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