Are you an NRI planning to return to India and wondering how the latest tax laws affect your cryptocurrency holdings? Budget 2025 has brought clarity on the taxation of Virtual Digital Assets (VDAs), including Bitcoin (BTC), Ethereum (ETH), and other cryptocurrencies. In this guide, we break down everything returning NRIs need to know about crypto taxes in India post-Budget 2025.

Crypto Taxation in India: No Change in 30% Tax Rate

The Indian government continues to tax cryptocurrency transactions at a flat 30% rate, along with applicable surcharge and cess. This tax applies to gains from selling or transferring any Virtual Digital Asset (VDA).

Additionally, 1% TDS (Tax Deducted at Source) continues to apply under Section 194S:

• Salaried individuals: TDS applies if the total transaction exceeds ₹10,000 in a financial year.
• Business owners and traders: TDS applies if transactions exceed ₹50,000 annually.

Important Tax Rules for NRIs Holding Crypto in India

• No Deduction Except Cost of Acquisition: You cannot claim deductions for transaction fees or other related costs. The only allowable deduction is the cost of acquiring the cryptocurrency.
• No Set-Off of Losses: Losses from one cryptocurrency transaction cannot be offset against gains from another or any other type of income.
• Expanded VDA Definition: Budget 2025 has widened the scope of VDAs to include all digital assets utilizing blockchain or distributed ledger technology, ensuring that all cryptocurrencies fall under the tax net.

Crypto as Undisclosed Income: New 60% Tax Rule

A key amendment introduced in Budget 2025 is the classification of undisclosed VDAs under Section 158B. If authorities discover unreported crypto holdings during searches, they can tax them at a steep 60% rate, with no deductions or exemptions. This provision applies retrospectively from February 1, 2025.

How Returning NRIs Should Report Crypto Income in ITR

NRIs must report crypto income in Schedule VDA of their ITR-2 or ITR-3. It is not permissible to report crypto gains under ITR-1. The following details must be disclosed:

• Date of acquisition
• Date of transfer
• Cost of acquisition
• Consideration received

Failure to report VDA income can result in penalties and penal interest for underreporting.

TDS Compliance: Relief for Late Filing of Form 26QE

The CBDT (Central Board of Direct Taxes) has provided relief to taxpayers who failed to file Form 26QE on time for TDS payments, including TDS on sale of property, between July 1, 2022 – February 28, 2023. If TDS was deducted but not deposited due to form unavailability, penalties under Section 234E and interest under Section 201(1A)(ii) will be waived if taxpayers filed by May 30, 2023.

Key Takeaways for NRIs Holding Crypto

• Crypto continues to be taxed at 30% with no loss offset or deductions.
• 1% TDS applies to transactions above ₹10,000 for salaried individuals and ₹50,000 for businesses.
• Undisclosed crypto assets may attract a 60% tax if discovered.
• NRI returning to India must report crypto in Schedule VDA of ITR-2 or ITR-3.

Frequently Asked Questions (FAQs)

1. How are crypto assets taxed for NRIs in India?

Crypto assets are taxed at a flat 30% rate on gains, with an additional 1% TDS deduction on transactions exceeding ₹10,000 (salaried) or ₹50,000 (business transactions).

2. Can I offset my crypto losses against other income?

No, losses from cryptocurrency transactions cannot be set off against gains from other sources.

3. What happens if I don’t report my crypto holdings?

Unreported crypto holdings discovered during tax audits or searches may be taxed at 60% under Section 158B, with no deductions or exemptions.

4. Do I need to file a specific ITR for crypto gains?

Yes, NRIs must use ITR-2 or ITR-3, as ITR-1 does not support reporting of Virtual Digital Assets (VDAs).

5. How can I minimize my crypto tax liability in India?

You can consult a tax expert to explore legal ways to manage your tax burden, such as strategic sale timing and ensuring compliance with reporting requirements.

Conclusion: Should NRIs Reassess Their Crypto Holdings?

With strict tax compliance and new penalties on undisclosed income, NRIs planning to return to India should reassess their crypto investment strategies. Consulting a tax expert can help you navigate compliance while minimizing tax liabilities.

📌 Need expert guidance on crypto taxation and NRI tax planning? Contact Dinesh Aarjav & Associates today to ensure tax compliance while optimizing your financial strategy!