Crypto Tax Clash: India vs. U.S.
2025, crypto isn’t just volatile—it’s regulated, audited, and heavily taxed. India and the U.S. are taking radically different approaches to controlling the crypto space. One is enforcing high penalties and rigid rules. The other is tightening reporting with some flexibility.
Here’s a no-fluff breakdown of how these two nations are rewriting the crypto rulebook—and how it affects you.
India’s Tax Crackdown
India’s crypto policies are among the toughest in the world. It’s less about encouraging innovation—and more about taxing it hard.
Flat Gain Tax
Crypto gains are taxed at a flat 30%.
No separation between long- or short-term.
Add 4% cess and you're taxed 31.2% total.
No Loss Relief
Losses from trading can’t be deducted.
Even if you lose more than you gain, tax is still owed on any profits.
TDS on Trades
Every crypto transaction triggers 1% TDS.
This applies to trades and transfers over ₹10,000.
High-frequency traders suffer liquidity loss.
Mandatory Reporting Soon
By 2026, crypto holdings and trades must be reported in your tax return.
Non-compliance can lead to:
Up to 70% penalties
Interest charges
Wallet or asset seizure
Exchanges Push Back
Indian platforms like WazirX and CoinDCX are urging the government to reduce TDS to 0.01%, warning that users are fleeing to foreign exchanges.
U.S. Tax Framework
The U.S. approach is less punitive but demands strict compliance with detailed reporting.
Property Classification
The IRS sees crypto as property, not currency.
Every trade, swap, or even buying coffee is a taxable event.
Loss Offset Allowed
You can use crypto losses to reduce other capital gains.
Up to $3,000 in losses per year can be used against regular income.
New 1099 Form
Starting in 2025, Form 1099-DA becomes mandatory.
Exchanges must report:
Gross proceeds
Wallet IDs
Cost basis (eventually)
You’ll get a copy—and so will the IRS.
FIFO Rule in 2026
From 2026, FIFO (First In, First Out) cost method will be mandatory.
Each wallet will be tracked individually.
This eliminates tax tricks like selectively selling low-cost coins.
Stolen Crypto Rule
If your hacked or stolen crypto is recovered:
Taxable, if you previously claimed it as a loss
Not taxable, if you didn’t claim anything earlier
The IRS treats recovered assets as income—only if a deduction was made earlier. This rule now affects users hit by SIM-swap hacks or phishing attacks.
Global Watchdog Era
Governments are getting smarter. Your wallet is no longer invisible.
CARF Implementation
India and the U.S. are both joining the Crypto-Asset Reporting Framework (CARF).
Over 40 nations will now share wallet and user data.
Transfers to foreign wallets or exchanges will be tracked globally.
Privacy coins and decentralized platforms may also fall under scrutiny soon.
Action Steps
For Indian Traders
Report all gains, even small ones
Use crypto tax software
Avoid unregistered platforms
Watch for lower TDS reforms
For U.S. Investors
Track every trade and wallet
Expect 1099-DA from all exchanges
Plan for FIFO by 2026
Use losses wisely to cut tax
Final Takeaway
Crypto in 2025 is no longer about speculation alone. It’s a high-stakes game where governments are watching every move.
India is taxing aggressively, with stiff penalties and no loss relief. The U.S. is enforcing detailed reporting with some room for strategy. Both are syncing under CARF to track global wallets.
As a trader or HODLer, you must stay informed and stay compliant—because in 2025, the cost of ignorance is huge.
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