VDA Tax India: What It Is and How It Affects Crypto and NFT Users

When you buy or sell VDA, Virtual Digital Asset, a term defined by India’s Income Tax Department to cover cryptocurrencies, NFTs, and other digital tokens. Also known as digital assets, it includes any token or asset that exists on a blockchain and has value, whether used for trading, gaming, or investment. Since April 2022, India has treated VDAs as taxable property — not currency — and any profit from selling them is taxed at 30%, with no deductions allowed. Even if you break even across multiple trades, each sale triggers a tax event.

The real punch comes from TDS (Tax Deducted at Source), a 1% withholding tax that exchanges and platforms must deduct from every VDA transaction over ₹10,000 in a single financial year. Also known as crypto tax withholding, it applies whether you’re buying or selling, and even applies to peer-to-peer trades if they go through a platform. This means if you buy ₹50,000 worth of Bitcoin on Unocoin or sell ₹15,000 of an NFT on a marketplace, 1% gets pulled out before you even see the money. It’s not a final tax — it’s a prepayment. You get credit for it when you file your return, but you still need to track every single transaction. Many users don’t realize this applies to wallet-to-wallet transfers if they use a centralized exchange as an intermediary.

What makes this tricky is that NFTs, non-fungible tokens used for digital art, collectibles, or in-game assets. Also known as digital collectibles, it is fully included under VDA rules, meaning every mint, sale, or trade is taxable. If you buy an NFT for 0.5 ETH and sell it later for 1.2 ETH, you owe 30% tax on the gain — even if you never cashed out into INR. And if you trade one NFT for another, that’s still a taxable event. The government doesn’t care if you used crypto to buy crypto; the value at the time of trade is what counts.

India’s rules don’t match up with how most people actually use crypto. You can’t offset losses against gains. You can’t deduct gas fees, exchange fees, or mining costs. Even if you lost money overall in 2024, you still pay tax on every profitable trade. That’s why so many Indian traders are now using tools to track every transaction — and why exchanges like Unocoin and CoinDCX now show TDS deductions right in your statement. The system is designed to catch everyone, even those who think they’re flying under the radar.

What’s next? The rules are still evolving. Some experts say the government may eventually allow loss carryforwards, but as of 2025, that’s not on the table. Meanwhile, users in restricted markets like Nigeria or Cuba are finding ways around banking bans — but in India, the tax system is fully enforced. If you’re trading crypto or NFTs here, you’re already in the system. The question isn’t whether you’ll be taxed — it’s whether you’ve tracked your transactions well enough to avoid penalties when you file.

Below, you’ll find real-world breakdowns of how VDA tax impacts Indian traders, what exchanges are doing to comply, and how to stay on the right side of the law — without overpaying or getting caught off guard.