Crypto transactions crossed ₹51,000 cr. in 2024-25 in India’

Why in News?

• 2024–25: Crypto transaction value in India crossed ₹51,000 crore, registering 41% year-on-year growth.
• Data shared by the Ministry of Finance in the Rajya Sabha.
• Government collected ₹511.8 crore as 1% TDS on crypto transactions.
• Growth trajectory:
  • 2022–23: ₹22,130 crore
  • 2023–24: ₹36,270 crore
  • 2024–25: ₹51,180 crore

Relevance

GS 3 – Economy

• Digital economy and fintech expansion
• Taxation of new asset classes
• Black money, money laundering, FEMA risks
• Financial stability and speculative markets

GS 2 – Governance & Regulation

• Regulatory vacuum in crypto-assets
• Institutional responsibility of the state
• Global financial governance coordination

What is Cryptocurrency?

• Cryptocurrency = a digital asset based on:
  • Blockchain technology
  • Cryptographic security
  • Decentralised ledger system
• In Indian law, crypto is classified as:
  • Virtual Digital Asset (VDA)
  • Not legal tender
  • Treated as a taxable asset, not currency

What are Virtual Digital Assets (VDAs)?

• Defined under the Income Tax Act as:
  • Cryptocurrencies (Bitcoin, Ether)
  • Non-Fungible Tokens (NFTs)
  • Other cryptographic tokens
• Excludes:
  • Indian digital rupee (e₹) issued by RBI

How is Crypto Taxed in India?

Legal Basis

• Introduced under the Finance Act, 2022
• Continued under the Income Tax Act, 1961 (retained in I-T Act 2025 framework)

Tax Structure

• 30% flat tax on profits from VDAs
• No loss set-off allowed
• 1% TDS on every transaction
  • Deducted at the time of transfer
  • Applies irrespective of profit or loss

How Was ₹51,180 Crore Estimated?

• Government collected ₹511.8 crore as 1% TDS
• Since:
  • 1% TDS = Total Transaction Value × 0.01
• Therefore:
  • Total crypto transaction value
    = ₹511.8 crore × 100
    = ₹51,180 crore

What Does the Growth Indicate?

• Mass retail participation despite:
  • High volatility
  • Strict taxation
• Indicates:
  • Rising financialisation among youth
  • Shift towards alternative assets
  • Platform-driven crypto trading boom

Why Is Crypto Growing Despite Heavy Taxation?

• Frictions like:
  • 30% flat tax
  • 1% TDS per transaction
• Yet growth due to:
  • Bull cycles in global crypto markets
  • Ease of app-based crypto trading
  • Narrative of crypto as:
    • Inflation hedge
    • High-risk, high-return instrument

Economic Implications for India

(A) Revenue Mobilisation

• Stable non-traditional tax base
• Predictable TDS inflows

(B) Capital Flight Risk

• Unregulated cross-border transfers
• Potential FEMA violations

(C) Financial Stability Risk

• High retail exposure to volatile assets
• No deposit insurance or investor protection

Key Policy Challenges

• Absence of:
  • Dedicated crypto regulator
  • Consumer protection framework
• Risks:
  • Money laundering
  • Terror financing
  • Tax evasion via foreign wallets
  • Market manipulation

Takeaways

• Crypto in India has moved from:
  • Grey-zone experiment → High-volume taxable asset class
• The surge to ₹51,000+ crore shows:
  • Effective tax collection
  • But also deep systemic exposure to an unregulated financial instrument

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