India’s aggressive push to regulate cryptocurrency transactions is paying off. The Finance Ministry revealed in Parliament that Tax Deducted at Source (TDS) collections from Virtual Digital Asset (VDA) trades have crossed a massive Rs 1,000 crore within just three years — a clear sign that the government’s stringent 1% TDS rule is reshaping crypto activity in the country.
Introduced in July 2022 under Section 194S of the Income Tax Act, the TDS mandate was designed to deter tax evasion, track crypto movements, and bring transparency to a largely unregulated market. Since then, collections have grown steadily year after year.
Crypto TDS: Year-on-Year Surge Shows Rising Compliance
Government data highlights a clear upward trend:
Financial Year TDS Collected (Rs crore)
FY 2022–23 221.27
FY 2023–24 362.70
FY 2024–25 511.83
Total (3 years) 1,095.80
Maharashtra topped the charts in FY 2024–25 with Rs 293.40 crore, followed by Karnataka (Rs 133.94 crore) and Gujarat (Rs28.63 crore) — pointing to heavy trading volumes in tech hubs and metro regions. Delhi and Rajasthan too featured prominently.
Govt Flags Tax Evasion: Offshore Exchanges Under Lens
Even as compliance rises within India, offshore crypto platforms are under serious scrutiny.
The Finance Ministry disclosed that:
●Three offshore exchanges were surveyed for tax lapses
●Investigations revealed TDS violations worth ₹39.8 crore
●Authorities unearthed undisclosed income of ₹125.79 crore
●Sector-wide searches exposed non-reported income of ₹888.82 crore
These platforms reportedly routed trades through foreign entities and unregulated wallets to bypass Indian tax laws.
Crackdown Intensifies: Penalties & Blocks Likely
The government is now coordinating actions between:
●Income Tax Department
●Enforcement Directorate (ED)
●Financial Intelligence Unit (FIU)
Officials warned that non-compliant offshore exchanges may face:
●Heavy penalties
●Prosecution
●Potential blocking within India
The focus is on identifying high-value crypto flows, suspicious transactions, and ensuring all platforms serving Indian users comply with the law.
Policy Impact: Regulation Matures India’s Crypto Sector
While the 1% TDS rule was initially criticised for reducing trading volumes on Indian exchanges, experts say the data now shows:
●Compliance awareness has increased significantly
●Crypto trading remains active despite tighter rules
●The market is shifting toward transparency and accountability
An industry expert commented:
“A Rs 1,000 crore TDS milestone signals that India’s crypto ecosystem is maturing. The next step is bringing global exchanges into India’s regulatory fold.”
What Lies Ahead?
The Finance Ministry said India will continue balancing innovation with safeguards. Upcoming priorities include:
●Stronger cross-border information sharing
●Enhanced AML (Anti-Money Laundering) integration
●Stricter licensing norms for global exchanges
●Continued monitoring of VDA transactions via TDS trails
India’s crypto tax regime — once debated — is now emerging as one of the world’s most assertive digital asset oversight frameworks.
