Cardano blockchain enables native token development and faces Indian tax regulations

Cardano is being utilized by businesses to develop custom native tokens for various Web3 applications, including utility platforms, digital rewards, governance systems, and NFTs. Because native asset functionality is integrated into the Cardano ledger, organizations can manage token transfers without requiring a separate smart contract for every transaction.

In India, Cardano (ADA) is classified as a virtual digital asset (VDA) under the Income-tax Act, 2025. For the 2026–27 tax year, positive income from ADA transfers is generally taxed at 30%, plus applicable surcharges and cess, with restrictions on deductions and loss set-offs. Additionally, a 1% Tax Deducted at Source (TDS) applies to qualifying resident VDA transfers under Section 393(1).

Staking on the Cardano network involves non-custodial delegation where ADA remains in the holder’s wallet without a protocol lock-up. While rewards are variable based on network operation, the tax treatment of receiving staking rewards versus the later disposal of those assets remains a complex regulatory consideration. Service providers may also face registration requirements with the Financial Intelligence Unit-India (FIU-IND).