VDA Regulations India: What You Need to Know About Crypto Compliance
When the Indian government introduced Virtual Digital Assets (VDA), a legal category for cryptocurrencies, NFTs, and other digital tokens. Also known as digital assets, it brought clarity—but also new rules that change how you buy, sell, or hold crypto in India. Before 2022, crypto lived in a gray zone. Now, it’s taxed, tracked, and regulated under the Income Tax Act. If you’re trading Bitcoin, Ethereum, or even meme coins like FLOKI or CaptainBNB in India, these rules directly affect your wallet.
The core of VDA regulations in India is simple: crypto is taxable. Any profit from selling or swapping digital assets is treated as income, taxed at 30% with no deductions for losses. That means if you bought ETH for ₹50,000 and sold it for ₹80,000, you owe tax on ₹30,000—even if you lost money on another trade. There’s also a 1% TDS (tax deducted at source) on every transaction over ₹10,000, applied by exchanges like MEXC or Bitget. This isn’t optional—it’s built into the platform. Even airdrops, like the FLY or DSG tokens you might claim, count as income when you receive them. The government doesn’t care if it’s a ‘gift’ or a ‘gamble’—if you got it, you owe tax.
What about exchanges? Platforms operating in India must now verify users, report transactions, and freeze accounts if they suspect tax evasion. This is why some global exchanges reduced services here. It’s not a ban—it’s compliance. And while mining or staking isn’t illegal, the tax burden makes it hard to profit unless you’re doing it at scale. The rules also apply to NFTs and DeFi protocols. If you’re using SynFutures or ApeSwap to trade, your gains are still VDA income. The Central Board of Direct Taxes (CBDT) doesn’t care if it’s decentralized—it’s still taxable.
There’s no exemption for small investors. Whether you spent ₹5,000 on HISS or ₹5 lakh on BTC, the 30% tax hits the same. And if you’re filing your ITR, you must disclose all VDA holdings under Schedule 112A. Missing this can trigger notices, penalties, or audits. The system is automated—exchanges report to the tax department, so hiding trades won’t work. This isn’t about stopping crypto. It’s about bringing it into the open. The goal? To collect revenue, not crush innovation.
So what does this mean for you? If you’re trading in India, keep records. Track every buy, sell, swap, and airdrop. Use a simple spreadsheet or free crypto tax tools. Know your cost basis. Know your dates. Don’t assume your exchange will do it for you—many don’t. And if you’re unsure, don’t guess. The rules are clear: VDA = taxable income. Period.
Below, you’ll find real-world breakdowns of how these rules affect specific tokens, platforms, and trading behaviors. From FLOKI to Bitcratic, from airdrops to DeFi, every post here ties back to one thing: how India’s VDA regulations shape your crypto moves today.
- By Eva van den Bergh
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- 31 Oct 2025
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