New Delhi: After watching cryptocurrencies’ valuations rise dramatically from the sidelines, Finance Minister Nirmala Sitharaman was forced to acknowledge its role as a trading asset, but not as a currency, as it is not a fiat currency approved globally.
In her 2022 budget speech, she imposed a 30% flat tax on cryptocurrencies, classifying them as virtual digital assets (VDAs) for the 2022-23 financial year. Since then, the government has now got a new source of income, with Rs.706 crore collected in taxes cumulatively since then.
Taxed under Section 115BBH of the Income Tax Act,1961, the income tax department’s tax sleuths have unearthed a new source of income, with tax collections rising significantly from Rs.269 crore in 2022-23 to Rs.437 crore in 2024-25, a 62% rise.
Even though cryptocurrencies’ like Bitcoin’s total market cap of $2.28 trillion is almost double that of the Sensex, the government has only just realised the immense value cryptocurrencies can provide in the long run.
According to estimates, Indians hold more cryptocurrencies than Europe, China or other custodians, a development that has surprised many. Yet, many of these cryptocurrency holders are choosing to trade on offshore portals to evade the steep taxes and compliance requirements.
According to CoinDCX’s Sumit Gupta, lowering these taxes and TDS requirements could offer greater incomes for the government, considering the increasing interest in cryptocurrencies as an alternative to the stock market.
India collected a total of ₹706 crore in crypto income tax over the last two financial years.
-FY2022–23: ₹269 crore
-FY2023–24: ₹437 croreBut here’s the BIG problem. TDS India lost to offshore exchanges:
-FY22–23: ~₹3,493 Cr
-FY23–24: ~₹2,634 Cr
(Data from from Esya… pic.twitter.com/Q0al6BzG11— Sumit Gupta (CoinDCX) (@smtgpt) July 22, 2025
Meanwhile, the Income Tax department’s tax sleuths have been actively using the latest technologies- including data analysis, AI and machine learning to catch evaders and further increase the tax base. The RBI and SEBI are yet to formulate detailed guidelines for cryptocurrencies, even as the Finance Minister and others remain concerned about its use for terror financing and tax evasion.
