Crypto investment: Crypto TDS collections cross Rs 1,000 cr in three years, govt shares data

India’s push to bring some order to the fast-growing cryptocurrency market is beginning to show real impact. In just three financial years, the government has collected more than Rs 1,000 crore in TDS from Virtual Digital Asset (VDA) transactions.

The data, shared by the Finance Ministry in Parliament, highlighted how the 1% TDS rule introduced in July 2022 under Section 194S of the Income Tax Act has become a key tracking tool for authorities. Designed mainly to monitor transactions and discourage tax evasion, the levy has given the government a clearer window into the size and movement of India’s crypto economy.

The numbers tell the story. TDS collections were Rs 221.27 crore in FY23, rose to Rs 362.70 crore in FY24, and have already touched Rs 511.83 crore in FY25. Together, that adds up to Rs 1,095.80 crore—reflecting crypto trades worth well over Rs 58,000 crore in just three years.

But while the tax net is expanding, regulators are also confronting a challenge: offshore crypto exchanges that continue to serve Indian users without following Indian tax laws. The Finance Ministry confirmed that the Income Tax Department has begun cracking down. Surveys on three such exchanges uncovered TDS lapses worth Rs 39.8 crore and undisclosed income of Rs 125.79 crore.

That’s not all. Broader searches and surveys across entities handling VDA transactions have revealed a much deeper issue—undisclosed income of Rs 888.82 crore linked to crypto dealings. Officials say these findings underline why the government has been firm about bringing crypto into a transparent, compliant framework.

The state-wise data also paints an interesting picture. Maharashtra leads comfortably with Rs 293.40 crore collected in FY25, followed by Karnataka with Rs 133.94 crore. Major tech and trading hubs like Gujarat, Delhi and Rajasthan also reported strong numbers, reflecting where much of India’s active crypto user base sits. Several smaller states recorded little to no collections, suggesting lower adoption or limited reporting.

The Finance Ministry has raised concerns over a significant compliance gap, noting that several offshore cryptocurrency exchanges catering to Indian users are not adhering to TDS requirements under the Income Tax Act. In response, the Income Tax Department has stepped up enforcement. Targeted surveys on three such exchanges revealed TDS lapses amounting to Rs 39.8 crore and uncovered an additional Rs 125.79 crore in undisclosed income.

Beyond these individual cases, wider search and survey operations across entities dealing in virtual digital assets have brought to light undisclosed income of Rs 888.82 crore.