Maharashtra-based cryptocurrency exchanges contributed the highest tax deducted at source (TDS) on virtual digital asset (VDA) transactions in FY 2024-25, with collections touching ₹293.40 crore, according to finance ministry data. Karnataka followed with ₹133.94 crore, while Gujarat reported ₹28.63 crore. The figures reflect the location of crypto exchanges rather than the geographical origin of trades.
Delhi emerged as the fourth-largest contributor, witnessing a sharp rise in TDS collections to ₹28.33 crore in FY25, compared to just ₹0.99 crore in the previous year. Rajasthan and Tamil Nadu recorded TDS collections of ₹15.48 crore and ₹9.97 crore, respectively, while most other states reported negligible or zero collections.
Overall, TDS on VDA transactions rose by over 41% year-on-year to ₹511.83 crore in FY25 from ₹362.70 crore in FY24. Maharashtra saw a 30.63% growth, whereas Karnataka registered a significant jump of 63.4%. Gujarat, however, reported a marginal decline of 2.3% during the same period.
The 1% TDS on cryptocurrency and VDA transfers was introduced from July 1, 2022, through the Union Budget 2022-23 to enable tracking of digital asset transactions. While presenting the Budget, Finance Minister Nirmala Sitharaman highlighted the rapid rise in VDA transactions and announced a dedicated tax framework, including a flat 30% tax on income from the transfer of VDAs.
Tax authorities note that while most domestic virtual asset service providers (VASPs) are complying with TDS provisions, overseas platforms catering to Indian users remain under scrutiny for non-compliance. As of November 2025, 47 VASPs were registered with the Financial Intelligence Unit-India (FIU-IND).
The government has also intensified enforcement actions, with around 18 cryptocurrency exchanges facing action for alleged GST evasion exceeding ₹824 crore. Additionally, the CBDT's NUDGE campaign has sent more than 44,000 communications to taxpayers who invested or traded in VDAs without properly disclosing such transactions in their income-tax returns.
Although cryptocurrencies remain unregulated in India, VDA transactions fall within the ambit of the Prevention of Money Laundering Act (PMLA). Under this framework, both domestic and offshore VASPs serving Indian users must register with FIU-IND to help prevent money laundering and terror financing, reinforcing the government's oversight over the rapidly expanding digital asset ecosystem.
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