India’s Crypto Market Surges Past $6 Billion Milestone as TDS Compliance Gains Momentum
India's digital asset sector just smashed through a major barrier—hitting a market valuation north of $6 billion. This isn't just growth; it's a statement of intent from one of the world's most crucial emerging economies.
The Compliance Catalyst
Behind the numbers lies a quieter, more significant trend: a marked rise in adherence to the nation's Tax Deducted at Source (TDS) framework. Traders and platforms aren't just chasing gains; they're building within the rules. This shift from the regulatory fringe toward the mainstream is what gives this milestone its real weight.
Building the Foundation, Not Just the Façade
Forget wild-west narratives. This growth is increasingly structured. The rising TDS compliance signals a market maturing, choosing sustainable participation over short-term speculation. It's a foundational shift that could attract a new wave of institutional interest looking for clarity, not just chaos.
A $6 billion valuation is a powerful headline, but the real story is in the compliance fine print. In finance, sometimes the most bullish signal isn't a price chart—it's a tax form.
A rapidly growing market
The total value of cryptocurrency transactions in India has increased sharply from ₹36,270 crore (≈ $4.03 billion) in 2023-24 and ₹22,130 crore (≈ $2.45 billion) in 2022-23. This represents a 41% jump over the previous year, demonstrating growing interest among investors and traders in the digital asset sector.
Analysts say the growth in crypto trading is being driven by more retail investors getting involved and trading platforms becoming widely used. People are also becoming more familiar with blockchain-based assets.
The data suggests that even though cryptocurrencies remain volatile, many Indians are now viewing them as serious investment choices rather than just short-term bets.
TDS collections reflect regulator impact
The Finance Act of 2022 introduced a 1% Tax Deducted at Source (TDS) on transfers of VIRTUAL Digital Assets under Section 194S of the Income Tax Act. The rule was brought in to track crypto transactions, ensure compliance, and reduce tax evasion in the rapidly growing digital asset market.
TDS collections have steadily increased alongside transaction volumes. In FY 2022-23, the government collected ₹221.27 crore (≈ $24.5 million). This ROSE to ₹362.7 crore (≈ $40.2 million) in FY 2023-24 and further to ₹511.83 crore (≈ $60.1 million) in FY 2024-25. In total, the three-year TDS collection now exceeds ₹1,095.8 crore (≈ $128.4 million).
Finance officials say the increase in TDS collections clearly shows that Section 194S is having its intended effect, pulling a larger share of virtual digital asset transactions into the tax system.
State-wise contributions
Maharashtra remained far ahead of the rest in 2024-25, with ₹293.4 crore (about $34.3 million) collected from crypto transactions. Karnataka came next with ₹133.94 crore (roughly $15 million). Delhi, Gujarat, and Tamil Nadu followed, each showing strong participation in the growing crypto market.
In contrast, smaller states saw very little activity. Andhra Pradesh collected just about ₹0.12 crore (roughly $13,000), and West Bengal was only slightly higher at around ₹0.6 crore (about $66,000).
These figures make it clear that most of India’s crypto traders are still based in the bigger metropolitan hubs, where internet access is stronger, and more people are actively involved in financial markets.
Enforcement against non-compliance
The Finance Ministry also pointed out growing concerns about offshore crypto platforms that continue to serve Indian users while ignoring the country’s tax rules. In recent survey actions, officials looked into three such exchanges and discovered that they had failed to deduct the required 1% TDS on transactions.
This lapse alone added up to violations worth ₹39.8 crore (around $4.4 million), highlighting the scale of non-compliance happening beyond local platforms. These exchanges were also found to have hidden income worth ₹125.79 crore (around $14 million).
Beyond that, the Income Tax Department has been carrying out search and survey operations across several businesses dealing in crypto trades. Through these actions, officials detected unreported income adding up to ₹888.82 crore (around $104.5 million).
These findings show that the government is now actively tightening its grip on tax evasion within the rapidly growing digital asset space.
Government perspective
The Finance Ministry said, “India’s cryptocurrency tax regime is paying off, with TDS collections from Virtual Digital Asset transactions crossing ₹1,000 crore in just three years.” Enforcement against non-compliant offshore exchanges is also intensifying.”
Officials note that the combination of growing transaction volumes and strict enforcement measures is gradually bringing greater transparency to the sector. Analysts say these steps could help build trust among investors because people generally feel more secure when a market is properly monitored and regulated.
Implications for investors
For Indian investors, the data shows that crypto has become a regular investment choice, and everyone trading, whether small or large amounts, now has to follow TDS rules because the government is watching more closely.
The market still swings sharply, but the government isn’t trying to shut it down. Through TDS and action against tax evaders, it wants crypto trading to grow in a clean and regulated environment. Experts expect the market to expand further, along with tighter supervision.
India’s crypto sector is clearly entering a more mature phase. Trading volumes have gone past ₹51,000 crore (around $6 billion), and TDS collected so far has already crossed ₹1,000 crore (about $128 million).
States like Maharashtra and Karnataka are leading in compliance, and at the same time, investigations have unearthed a large amount of hidden income that was never declared. This shows the market is booming — and the government is making sure it remains accountable.
As the market keeps expanding, investors and exchanges will have to balance seizing opportunities with following the rules. At the same time, policymakers are trying to build a digital asset environment in India that is safe, fair, and transparent for everyone.
Also Read: Coinbase Returns to India After 2 Years Ahead of 2026 Fiat On-Ramp
