The rise of cryptocurrencies has made taxes on crypto in India a crucial topic for investors and regulators. India’s 2022 budget officially defined digital currencies as “Virtual Digital Assets” (VDAs) and introduced a dedicated tax regime . Under this framework, any gain from transferring crypto – whether selling for INR, swapping one coin for another, or using crypto to buy goods – is taxed at a flat 30% (plus applicable surcharge and 4% cess). In practice, this means crypto tax in India does not distinguish between short-term or long-term holdings: every profit is taxed at the top rate. There are no concessional rates or exemptions for “holding” crypto. We break down these rules and recent updates below, so you can navigate the cryptocurrency taxes in India landscape with confidence.
Under Indian law, cryptocurrencies and related tokens are classified as Virtual Digital Assets (VDAs). This official definition (introduced by the Finance Act 2022) brought cryptocurrencies like Bitcoin and Ethereum under the tax net. Importantly, Section 115BBH of the Income Tax Act now mandates a 30% tax on any income from VDA transfers. In other words, if you sell, trade, or spend crypto for a gain, you owe 30% of that gain in tax. No other deductions (aside from the asset’s cost) are allowed. In fact, the only allowable expense is the original cost of acquisition of the crypto; all other expenses (trading fees, etc.) are non-deductible.
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Flat 30% tax on all crypto gains. Under Section 115BBH, any profit from selling crypto for INR, swapping crypto-to-crypto, or using crypto to purchase goods/services is taxed at 30% (plus surcharge and 4% health/education cess). There is no long-term/short-term distinction.
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1% TDS on crypto transactions. A 1% Tax Deducted at Source (TDS) applies to crypto transfers above the annual threshold. Once your transactions exceed ₹50,000 in a year (₹10,000 for individuals/HUFs), the platform must deduct 1% TDS on each transfer. Exchanges usually handle this; for peer-to-peer or overseas trades, the buyer must deduct and deposit the TDS. This tax credit can be claimed when filing your return.
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No offset of losses. Crucially, losses from crypto cannot be set off against other income or other crypto gains. If you lose money on one coin, you cannot use that loss to reduce taxes on another coin’s gains. The only deduction allowed under 115BBH is the cost you paid for the coin. This makes India’s regime very strict compared to many countries.
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Crypto treated as asset, not currency. The law treats crypto as a capital asset, not legal tender. Therefore, crypto-to-crypto trades, and crypto used as payment, trigger a taxable event. For example, trading 1 BTC for Ethereum will incur the 30% tax on any profit, just like selling BTC for rupees. Moving coins between your own wallets or simply holding them does not trigger .
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Gifts and airdrops are taxed. Receiving crypto as a gift or from an airdrop is generally taxed at your normal income tax rate (slab rate) on the fair market value received. Gifts over ₹50,000 (in aggregate per year) to non-relatives are taxable. (Gifts from close relatives or below ₹50,000 are exempt, as with other assets.) Once you later sell those gifted or airdropped coins, the 30% crypto tax applies on any gain, using the value on receipt as the cost basis.
The above points summarize India’s cryptocurrency taxes framework. In practice, taxpayers must carefully track every crypto transaction. Since FY 2022–23, the Income Tax Return includes a new Schedule VDA for this purpose. Every crypto sale or swap is reported here with date, sale price, cost of acquisition, and gain/loss. Exchanges typically report the 1% TDS, which filers can claim as a credit. For crypto held as an investment, gains are shown as capital gains; if you trade frequently, you may need to report crypto gains as business income (using ITR-3 instead of ITR-2).
In sum, crypto gains are taxed at the top rate in India. Section 115BBH leaves no room for exemptions. For example, staking rewards or mining income are taxed under regular income tax (at your slab rate) when received, and any subsequent sale of those coins is still taxed at 30% (often with a ₹0 cost basis if self-mined). This prevents “gaming” the system by reclassifying crypto income. If you receive crypto as payment or salary, that count as ordinary income first, then selling it triggers VDA tax.
If the crypto rules seem complex, keep in mind the key triggers:
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Taxable transfers: As noted, selling crypto for INR or swapping coins for a profit are taxable. Using crypto to buy goods/services is also a sale. These are all subject to 30% tax.
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Tax-free activities: Simply buying and holding crypto is not taxed until you sell or spend it. Transferring coins between your own wallets has no tax impact. Also, as usual, gifts from relatives or small gifts (<₹50,000) are exempt from tax.
1% TDS in detail: To enforce compliance, Section 194S (Finance Act 2022) introduced a 1% TDS on crypto transfers. Once your yearly crypto outflows exceed the threshold (₹50k or ₹10k as above), the seller must deposit 1% TDS with the government. On Indian exchanges, this is automatic. On P2P or foreign platforms, the onus falls on the buyer. Failing to deduct or deposit this TDS can invite penalties under Sections 271C/276B. When filing taxes, you can claim these TDS amounts as credit against your 30% liability. Keep records of TDS certificates (Form 26QE may be used by sellers) to avoid mismatches.
Reporting Crypto Income
India’s tax authorities now treat crypto like any other taxable asset. From FY 2022–23 onward, taxpayers must report crypto gains on their ITR forms using a dedicated Schedule VDA (Virtual Digital Assets). This schedule asks for each transaction: date of acquisition, date of transfer, sale consideration, cost of acquisition and the resulting gain. For example, if you sold 2 ETH in May 2023 for ₹200,000 that you bought in Jan 2023 for ₹120,000, you’d list those dates and figures so the gain (₹80,000) is taxed at 30%.
Filing specifics:
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ITR Forms: Individual investors with only salary/business income and crypto typically use ITR-2 (capital gains) or ITR-3 (business income). The new Schedule VDA appears in both forms.
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Tax Rates: As mentioned, all crypto-transfer profits are taxed at 30%. In addition, a 4% education cess and applicable surcharge (depending on your income bracket) are added.
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No Netting Losses: Do not net one crypto gain against another loss. If you made ₹100,000 on BTC and lost ₹50,000 on another coin, you still pay 30% on the full ₹100,000. The ₹50,000 loss is simply disregarded.
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Deadlines: Crypto gains are reported in the ITR for the relevant fiscal year (April–March). For instance, gains in FY 2023–24 (Apr 2023–Mar 2024) are reported by July 31, 2024 (the normal ITR due date), or by Dec 31, 2024 for belated filing.
Other Crypto-Related Taxes
While the 30%/1% regime covers income tax, be aware of other levies that can affect crypto:
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Gift Tax: If you receive crypto as a gift (from non-relatives) exceeding ₹50,000 in a year, that gift’s full value is taxed as income at your slab rate. As with any gift, transfers between spouses/close relatives or gifts below ₹50k are exempt.
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GST on Crypto Services: Starting July 7, 2025, the Indian government has mandated an 18% GST on crypto exchange and service fees for Indian users. This GST is applied to trading fees, withdrawal fees, staking charges, etc., and is in addition to the 30% income tax and 1% TDS. In practice, platforms like Bybit now charge Indian traders 18% GST on transaction fees. This makes crypto trading significantly more expensive. (The GST is on the fee component, not the entire crypto transaction value.)
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Mining/Staking Income: If you earn crypto via mining or staking, that income is treated as ordinary income in the year received (at your normal tax rate). Later, when you sell those coins, the 30% VDA tax applies (with a ₹0 cost basis since they were “self-mined”). Note that even mining expenses are not deductible except through this mechanism.
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NFTs & Other VDAs: All crypto-like assets (NFTs, tokens, etc.) fall under the same rules as coins. Profits from selling an NFT are taxed at 30%; buying/selling NFT art repeatedly is treated as crypto trading. Gift or income from NFTs follows the same slab-rate-then-30% logic above.
Staying Compliant & Looking Ahead
India has signaled that this strict crypto tax regime is here to stay. The Interim Budget 2025 did not change the 30% tax or 1% TDS rules. On the contrary, it introduced more transparency: from FY 2025–26 onwards, crypto exchanges and other reporting entities must furnish detailed reports of all user transactions to the tax authorities. The goal is to plug tax evasion. In fact, by mid-2025 tax authorities reported collecting over ₹700 crore from crypto taxes (FY 2022–24), and launched AI-driven systems to match exchange data with returns.
For taxpayers, the advice is straightforward: keep meticulous records of each crypto transaction (dates, INR value, cost, etc.) and report them accurately. Crypto tax tools or accountants can help. Remember that failure to declare crypto gains can lead to notices or penalties. The authorities are also planning to implement the OECD’s Crypto-Asset Reporting Framework (CARF) by 2027, meaning undeclared offshore crypto may not stay hidden.
In conclusion, understanding the crypto tax in India is essential for any investor or trader. The rules are strict, but clear: every profit from a “transfer” of crypto is taxed at 30%, every transfer over the threshold incurs 1% TDS, and losses are not deductible. By using the new Schedule VDA and claiming any TDS credits, you can stay compliant. While this regime may seem harsh, it also provides certainty: if you know the rules, you can calculate your tax owed and plan accordingly. Keep an eye on announcements each budget season, but for now, these are the latest laws on cryptocurrency taxes in India.
