Cryptocurrency transactions
Why in news?
Cryptocurrency transactions in India reached Rs 51,180 crore in 2024-25, reflecting a 41% year-on-year increase, with the government collecting Rs 511 crore in 1% Tax Deducted at Source (TDS).
Enforcement and Compliance Actions
- The Central Board of Direct Taxes (CBDT) identified Rs 888.82 crore in undisclosed VDA income, while issuing over 44,000 notices to traders who omitted crypto gains from Income Tax Returns.
- Uttar Pradesh police recently dismantled a crypto fraud ring laundering Rs 11.95 crore via rented bank accounts, arresting six suspects.
- VDAs fall under Prevention of Money Laundering Act (PMLA) oversight, with exchanges required to report transactions to FIU-IND, leading to Enforcement Directorate actions seizing Rs 4,189.89 crore in proceeds.​
Regulatory Landscape
- India lacks a dedicated crypto law but treats VDAs as taxable assets, with SEBI monitoring security-like tokens since April 2025 under a multi-agency model involving RBI and Finance Ministry.
- Crypto trading remains legal but unregulated as legal tender, emphasizing KYC/AML compliance and no loss offsets against gains.
- TDS collections from crypto hit Rs 1,000 crore over three years, signaling robust tax enforcement without full regulatory clarity.​
About cryptocurrency transaction
A cryptocurrency transaction transfers digital assets between wallets on a blockchain network without intermediaries like banks.​
Key Components
- Transactions require a cryptocurrency wallet holding private and public keys, the specific blockchain (e.g., Bitcoin or Ethereum), and a fee paid in crypto to cover network processing costs known as gas or miner fees.
- The sender's wallet generates a unique digital signature using their private key to authorize the transfer securely.​
Process Steps
- Creation: Enter the recipient's public address and amount; the wallet bundles this data, hashes it cryptographically, and signs it with the sender's private key.​
- Broadcasting: The signed transaction spreads across network nodes, which verify validity, balance, and prevent double-spending by checking the mempool.​
- Confirmation: Miners or validators (via proof-of-work or proof-of-stake) include it in a block, adding it to the immutable blockchain; multiple confirmations (e.g., 6 for Bitcoin) ensure finality, taking minutes to hours.​
Transactions are irreversible and publicly viewable on explorers like Blockchain.com or Etherscan.
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