The Indian government collected approximately ₹511 crore (₹5.12 billion) during financial year 2024-25 under the 1% TDS rule on cryptocurrency transactions. This marks a substantial increase from FY24, when the TDS collected stood at around ₹363 crore.
The 1% TDS requirement — introduced in July 2022 under section 194S — applies on transfers of cryptocurrencies and other virtual digital assets (VDAs) when the transaction value crosses prescribed thresholds.
Why revenue jumped — Growth in crypto transactions & compliance
🔄 Increased volume of crypto trades
A jump in overall crypto transactions across Indian exchanges likely contributed. As transactions rose, 1% withholding on transfer value translated into larger absolute TDS collections.
✅ Better compliance and exchange-level deduction
Major Indian crypto exchanges deduct TDS at source automatically during transactions, which improves tax compliance and contributes to steady flow of TDS revenue.
📈 Growing investor base
With rising adoption of crypto and more people trading or converting VDAs, the tax base widened — allowing even small individual trades to add up to significant total TDS receipts.
What this means for the crypto market and taxation regime
- Government tax-revenue recognised: ₹511 crore indicates that crypto transactions are being meaningfully taxed under Indian law — validating the 1% TDS rule’s role in bringing transparency.
- Compliance burden for traders: The TDS deduction means traders need to factor in upfront withholding; for frequent traders or high-volume investors, this can affect cash flows and effective returns.
- Signal to exchanges & policymakers: Consistent tax collection could encourage regulators to further tighten oversight — possibly leading to stricter reporting or enhanced compliance for crypto platforms.
- Indicator of crypto activity scale: This data suggests crypto usage and turnover is no longer marginal in India — significant volumes are being traded, leading to measurable tax collections.
What remains uncertain — Limits of TDS data
- TDS is just a withholding mechanism; it does not capture all crypto-income tax liability. Profits from sales/trades still require separate tax treatment (flat 30% tax under existing rules).
- The ₹511 crore only reflects transfers/transactions where TDS applied — it does not include unreported or offshore trades, so actual crypto volume may be higher.
- Some recent reports suggest a portion of due crypto-TDS may remain unremitted — indicating possible gaps in compliance. Businessworld
Final thought
The collection of ₹511 crore in FY25 from 1% crypto-TDS underlines the growing influence of cryptocurrencies in India’s financial ecosystem. The revenue figure is a clear sign that the crypto-tax framework is working — but it also highlights the need for traders and exchanges to stay compliant as regulatory scrutiny intensifies. The coming years may see further tightening of crypto taxation, reporting norms, and monitoring.
