If you’re curious about crypto tax in India, you’re not alone. With so many people getting into digital assets, questions like “Is crypto taxable in India?” are more common than ever. The short answer? Yes, it is! Understanding Indian cryptocurrency taxes is now a must if you want to stay on the right side of the law.
In this guide, we’ll walk you through how to pay crypto taxes in India, covering the basics of reporting your crypto gains and losses. So, let’s dive into what you need to know about crypto tax India.
Key Takeaways:
- India taxes crypto profits at a flat 30% rate, and losses cannot offset this, meaning each profit is fully taxable without deductions.
- A 1% TDS is deducted on crypto trades exceeding ₹50,000 yearly (₹10,000 for smaller investors).
- The deadline for filing Income Tax Returns (ITR) on crypto gains for the financial year is July 31; missed deadlines allow for delayed filing by December 31 but with potential penalties.
What are Cryptocurrencies?
Cryptocurrencies are digital money that works without being controlled by any government or bank. They use blockchain technology to check and record transactions.
Bitcoin is the most popular cryptocurrency, but there are thousands of others, each with different features and uses.
Is Crypto Taxed in India?
Yes, crypto is taxed in India. The government started taxing crypto income from the Union Budget of 2022. The tax rate on gains from crypto is set high, at 30%. Any income you make from selling or transferring crypto is taxed this way. Unlike other assets, you cannot reduce your crypto income with any deductions or set losses against it. This means if you make a profit on crypto, you will pay full tax on it.
Also, a 1% TDS (Tax Deducted at Source) is applied on each crypto transaction that crosses ₹50,000 in a year for regular investors, or ₹10,000 for individual investors. This 1% TDS is meant to help the government track crypto trades easily.
How Crypto Taxation Works in India?
Tax on crypto in India is straightforward but strict. Any time you make a profit by selling, transferring, or exchanging your crypto, you pay a 30% tax on the profit.
Suppose you bought a digital asset for ₹100,000 and sold it later for ₹150,000; the ₹50,000 gain is taxed at 30%, so ₹15,000 goes to taxes. You can’t deduct the cost of any other expenses, only the purchase price of the crypto.
The 1% TDS rule on each transaction above ₹50,000 or ₹10,000 means that crypto exchanges or buyers must withhold this amount and report it. So, if you trade frequently, the TDS amount can add up quickly, impacting the cash you hold. However, you can use the TDS already paid to reduce your final tax.
To avoid illegal activities, crypto platforms in India must now follow anti-money laundering (AML) guidelines and KYC (Know Your Customer) rules strictly. This means exchanges are legally responsible to report suspicious transactions to the Financial Intelligence Unit (FIU). These checks are part of India’s attempt to stop illegal use of crypto.
Latest Crypto Tax Rate in India Explained
In the past two years, the Indian government and the Income Tax Department (ITD) have actively provided new regulations and clarified tax rules for those investing in cryptocurrency. The policy framework includes clear-cut details on the income tax applicable to crypto gains, as well as the introduction of a TDS system to track transactions. Here is the quick timeline:
2024
- For the 2023-2024 financial year, the Income Tax Return (ITR) form includes a specific section, known as the Schedule for Virtual Digital Assets (VDA), to report any income from cryptocurrency and other digital assets.
- The deadline to file your ITR for the 2023-2024 fiscal year is July 31, 2024. If you miss this deadline, you can still submit a delayed return by December 31, 2024, but penalties may apply for late filings.
2023
- For tax purposes, crypto and other virtual digital assets (VDAs) must be declared differently based on how they’re held. If you’re holding them as investments, they should be reported as capital gains. However, if these assets are used for trading purposes, they should be classified as business income. Individuals reporting business income must use the ITR-3 form rather than the ITR-2.
- Penalties are in place under sections 271C and 276B for failing to deduct or deposit the required TDS on crypto transactions.
2022
- Section 115BBH specifies that any losses from crypto or other digital assets can’t be adjusted against gains from other assets or any other income. Only acquisition costs are permitted as deductions.
- If you receive a gift in the form of digital assets, it will be taxable as income for you.
- The 30% tax rate on crypto earnings was implemented on April 1, 2022. A 1% TDS on crypto transactions began on July 1, 2022.
- Section 194S, part of the 2022 Budget, mandates a 1% TDS on digital asset purchases if your yearly transactions exceed ₹50,000 (or ₹10,000 depending on your filing type).
- The 2022 Budget, through Section 115BBH, also applies a 30% tax rate on VDA income along with a 4% cess on this tax.
- Section 2(47A) of the Income Tax Act now provides a formal definition for Virtual Digital Assets, clarifying which assets fall under these regulations.
The 30% Crypto Tax Rate in India: When Do You Pay It?
In India, the 30% tax on crypto gains applies specifically to the “profits” you make when you sell or transfer digital assets. The rule is simple – any income you earn from selling or transferring crypto is taxed at a flat rate of 30%, plus an additional 4% cess. It doesn’t matter whether it’s a one-time sale or regular trading; if there’s a profit, you owe this tax.
Here’s when you’ll need to pay it:
- If You Sell at a Profit: When you sell your crypto asset for more than you paid, that profit is fully taxed at 30%. This applies every time you make a profit, even if it’s just once or every now and then.
- Crypto Mining: If you earn any income through mining, that income also falls under the 30% tax. Unlike regular businesses, you can’t deduct any expenses, only the original purchase cost.
- Gifted Crypto: If someone gifts you crypto, you, as the recipient, have to pay tax on its value. The tax will be based on its market value at the time you receive it, so the rule treats gifts as taxable income.
- Transferring Between Crypto Assets: Whenever you swap one crypto for another, any profit in the transaction is subject to the tax.
Which Crypto Transactions Are Taxed in India?
| Transaction | Tax Implications |
| Buying crypto | 1% TDS, generally deducted by the Indian exchange (offshore exchanges like Binance do not deduct TDS) |
| Selling crypto | 30% tax on the profit made from selling |
| Exchanging crypto for another crypto | 30% tax on the profit from the trade |
| Spending crypto | 30% tax on any gain realized during spending |
| Holding crypto | No tax |
| Transferring crypto between your wallets | No tax |
| Receiving crypto airdrops | Taxed as income at your applicable rate; 30% tax if sold later |
| Receiving from a hard fork | Taxed as income at your applicable rate; 30% tax if sold later |
| Receiving crypto as a gift | Typically taxed for the recipient, but exempt for gifts from close family or below ₹50,000 |
| Donating crypto | 30% tax on any profit; These donations will not be considered for tax deductions |
| Mining rewards | Taxed as income at your applicable rate; 30% tax on any profit if sold later |
| Staking rewards | Taxed as income at your applicable rate; 30% tax if sold later |
Tax On DeFi
DeFi, or Decentralized Finance, is an emerging space where financial services like lending, borrowing, and trading are done without traditional intermediaries.
In India, DeFi is still evolving, and as of now, the Indian government does not have specific tax laws for DeFi platforms, so existing tax rules for cryptocurrencies apply.
If you earn any income through DeFi platforms, such as lending your crypto and receiving interest, this income will generally be taxed under the head “Income from Other Sources”.
The tax rate depends on your total taxable income and will be taxed according to your personal income tax slab. If you engage in DeFi activities like yield farming or liquidity provision, the profits will be taxed as capital gains if you sell the earned crypto. These profits are generally taxed at 30%, in line with the tax rate for short-term capital gains from crypto.
The decentralized nature of DeFi makes it harder for authorities to track transactions. This poses challenges for tax enforcement. Without a central authority, it’s difficult to implement mechanisms like Tax Deducted at Source (TDS), which apply in traditional financial systems.
But the government has indicated that DeFi-related earnings should follow the same tax rules as cryptocurrency transactions.
Tax on Buying Crypto
When you buy cryptocurrency in India, there is generally no tax obligation at the time of purchase. However, tax comes into play when you sell or trade the crypto.
For buying crypto through Indian exchanges, you will have to pay a 1% TDS on the transaction amount, which is deducted by the exchange. This TDS is not deducted if you’re buying crypto through international exchanges or a P2P platform like Binance P2P.
To clarify, buying crypto itself doesn’t trigger a tax, but it sets the stage for taxes when the crypto is sold or exchanged. You need to keep track of the price at which you purchased the crypto, because that will be used to calculate your gains when you sell it.
Tax on Selling Crypto
When you sell or dispose of your cryptocurrency in India, the gains are subject to tax. The tax liability depends on how long you hold the cryptocurrency.
If you sell crypto after holding it for less than 36 months, it will be classified as a short-term capital gain (STCG). The tax rate on STCG for crypto is a flat 30%, meaning whatever profit you make from selling your crypto will be taxed at this rate.
For crypto held for over 36 months, the gains might be treated as long-term capital gains (LTCG), which could be subject to a lower tax rate.
But since cryptocurrencies are considered speculative assets by Indian tax authorities, LTCG tax rates may not apply, and the 30% tax rate is likely to stay for long-term holdings as well.
Tax on Transferring Crypto
Transferring cryptocurrency between wallets that you own does not result in tax in India. This means if you move crypto from one wallet to another, or from one exchange to another, no tax will be applied. The act of transferring is not considered a taxable event unless the transfer involves selling, trading, or exchanging the cryptocurrency.
However, if you transfer crypto to another person or wallet for trading or exchange, that could result in tax implications. If you sell or swap the crypto during the transfer, any gains made will be subject to tax.
For instance, if you transfer crypto to a friend as a gift or trade it for another crypto, the capital gains tax rules will apply, and the transaction will be taxed accordingly.
In simple terms, while transferring crypto between wallets you control doesn’t incur taxes, transferring crypto for anything other than storage could be treated as a sale, leading to capital gains tax.
Tax on Airdrops and Forks
Airdrops and forks are common ways in which cryptocurrency holders receive free tokens. Airdrops occur when a project distributes free tokens to crypto holders, usually as part of a promotion or project launch.
Forks happen when a blockchain network splits, and new tokens are issued to holders of the original coin.
Both of these events are taxable in India.
For airdrops, the value of the tokens received is taxed as income at your individual income tax rate. However, if you sell the tokens later for a profit, the profit will be subject to the 30% tax rate on capital gains.
Similarly, tokens received through a hard fork are also taxed as income at the time they are received. If you later sell those tokens, any profit will be taxed at 30%.
Note: The tax on these events is calculated based on the market value of the tokens when you receive or sell them.
Crypto Gift Tax in India
In India, crypto gifts are treated as movable property and are taxable in the hands of the recipient. If you receive crypto as a gift, and the value exceeds ₹50,000, it will be taxed as income from other sources. The tax rate will depend on your income tax slab.
Note: If the gift comes from a close relative (such as parents, siblings, or spouse), it is generally exempt from tax.
Tax On Crypto Mining
Crypto mining, which involves solving complex mathematical problems to validate transactions on the blockchain, is considered a taxable activity in India.
Mining crypto is considered a business activity by the Indian tax authorities, so the income from mining is taxed as “business income”. If you sell the mined crypto later, any capital gains from the sale are also taxed at 30%. However, since mining requires significant resources like electricity and hardware, the costs associated with mining can be deducted from your income when calculating taxes.
But, the Indian tax laws currently do not allow for deductions on the mining process itself, so it’s crucial to understand how to report this income properly.
Tax On Crypto Staking
Staking is another way to earn rewards from cryptocurrency. It involves locking up your crypto to support the operations of a blockchain network, often in exchange for staking rewards.
In India, staking rewards are treated as income, and they are taxed at the same 30% rate as other crypto earnings. If you are looking for staking platforms, check out our guide on the best crypto staking platforms.
Tax On Crypto Payments As Salary
When an employer pays a salary in cryptocurrency, it is treated as income by the Indian government. The value of the crypto at the time of payment will be considered your income, and you will be taxed accordingly.
The amount received will be taxed under the “Income from Salary” head, just like how regular salary is taxed. The income tax rate will depend on your income slab, which could range from 5% to 30% depending on your total earnings.
Plus, if you later sell or trade the crypto for a profit, any gain will be treated as a capital gain and taxed at 30%. This is the same tax rate applied to short-term crypto gains, which means that even if you don’t convert the crypto into INR immediately, any profit made from selling it later will be taxed.
For example, if you receive payment in Bitcoin (BTC) valued at ₹70,000, but later sell it for Tether (USDT) when Bitcoin is priced at ₹72,000, you will only be taxed on the ₹2,000 profit. This ₹2,000 profit will be taxed at the 30% capital gains rate, while the original ₹70,000 will be taxed according to your individual income tax slab, not at the 30% rate.
When is Crypto Tax Free in India?
In India, there are some cases where crypto transactions are not taxed. This means you don’t always pay taxes on your cryptocurrency. For example, holding your crypto in your wallet, like Bitcoin or Ethereum, does not trigger any tax as long as you don’t make any profits by selling it.
Another situation where crypto is not taxed in India is when you transfer it between wallets you own. For instance, if you move your crypto from one exchange account to another or from your hot wallet to a cold wallet, it is not taxable. This is seen as just a transfer and not a taxable event because there is no sale or profit involved.
Crypto that is received as a gift from a close family member, like your parents or siblings, is also free from tax. According to Indian law, gifts from close relatives are not taxed. But if the gift comes from someone who is not closely related, and its value is more than ₹50,000, it could be taxed as income.
Lastly, crypto rewards from activities like staking or mining are not taxed unless you sell or exchange the crypto. As long as you keep it without selling, you don’t pay tax. However, when you do sell the crypto for a gain, you will have to pay tax on the profit.
So, in short, holding, transferring, and receiving certain gifts are all ways to avoid crypto tax in India.
1% TDS on Crypto Assets in India Explained
In India, there is a 1% Tax Deducted at Source (TDS) rule for crypto transactions. This means that if you buy or sell crypto, the exchange or platform handling the transaction will deduct 1% of the total value before completing the transaction. The 1% TDS is applicable only if your transaction exceeds ₹50,000 in a financial year (₹10,000 for other cases like traders).
For example, if you sell ₹1,00,000 worth of crypto, the platform will automatically deduct ₹1,000 (1% of ₹1,00,000) as TDS. This is a prepayment of your tax and goes directly to the government. You don’t lose this amount. When you file your Income Tax Return (ITR), you can adjust the ₹1,000 TDS against the tax you owe for the year.
This 1% TDS rule, which was introduced in July 2022, helps the government track crypto transactions and ensures that taxes are paid.
It is important to note that TDS is only deducted for exchanges within India. If you are trading on a platform based outside of India like Binance or OKX, or if you are trading peer-to-peer (P2P), no TDS is deducted. However, you still have to report these transactions when you file your taxes.
Lost or Stolen Crypto Tax in India
In India, there is no special rule that handles the taxation of lost or stolen crypto. If you lose your crypto due to theft or hacking, you cannot claim the loss to reduce your taxes.
Simply put, the Indian tax authorities do not allow you to deduct losses from lost or stolen crypto from your taxable income.
However, if you are involved in a business and the lost or stolen crypto is part of your business, it might be possible to treat the loss differently. But this would need to be explained and verified with the tax department as a business loss, which could potentially be written off.
How to Calculate Taxes on Crypto
Let’s consider an example to understand how taxes are calculated:
| Transaction | Date of Purchase | Date of Sale | Amount Paid (₹) | Amount Received (₹) | Holding Period | Gain/Loss (₹) | Tax Type | Tax Payable (₹) |
| Buy Bitcoin | 1st Jan 2024 | – | ₹500,000 | – | – | – | – | – |
| Sell Bitcoin | – | 1st July 2024 | – | ₹700,000 | 6 months | ₹200,000 | Short-Term Capital Gain (STCG) | ₹60,000 |
Note you can also use a crypto tax calculator like Koinly, where you can also generate a crypto tax report.
When to Report Crypto Taxes to the Income Tax Department?
In India, taxpayers need to report their income, including any crypto earnings, according to the financial year, which runs from April 1 to March 31 of the following year.
Here are the key tax reporting dates for crypto income in the 2024-2025 tax period:
- ITR Deadline for Non-Audited Taxpayers: For individuals and businesses without audit requirements, the deadline for filing the Income Tax Return (ITR) for the 2023-24 financial year is July 31, 2024.
- ITR Deadline for Audited Taxpayers: If your income is subject to audit, such as in cases of substantial business activity from crypto trades, the filing deadline is October 31, 2024.
- Late Filing Window: A belated ITR can be submitted by December 31, 2024, though it may involve penalties.
Crypto Tax Forms
When it comes to filing crypto taxes for the financial year in India, taxpayers need to pick a specific form on the income tax portal. You’ve got two main options:
ITR-2 Form
If you’re thinking of your crypto earnings as an investment, like holding and selling assets at a profit, then ITR-2 might be the one you’re looking for. This form is for people who see crypto as capital gains and aren’t running a business that earns from crypto.
The ITR-2 form works best for individuals and Hindu Undivided Families (HUFs) without business income. Inside this form, there’s a section called Schedule VDA (Virtual Digital Assets), which is where you detail your crypto gains, losses, and overall income from digital assets.
ITR-3 Form
Now, if crypto trading is more than just a side activity for you – let’s say you’re buying and selling regularly, or it’s a significant part of your income – then ITR-3 could be the way to go. This form is for those treating crypto income as business income, usually if it’s frequent or has grown to a larger scale.
Using ITR-3 is a bit more involved because it asks for a breakdown of your business income, which would include crypto trading in this case.
Schedule VDA shows up here too, but with extra reporting requirements like a detailed list of each crypto transaction: acquisition date, sale date, costs, and proceeds, among other details. If your crypto activities require an audit, this is typically the form to use.
Conclusion
To sum up our guide on income tax India, it is taxed seriously. Since 2022, rules apply to all crypto gains at a high 30% rate. No deductions or offsets for losses can reduce this tax burden, so you pay tax on every profit. Also, there’s a 1% TDS on transactions over ₹50,000 in a year (₹10,000 for individuals) to track trades.
These rules make it crucial to keep accurate records of every crypto transaction. With penalties for non-compliance, filing taxes on crypto is now part of yearly income tax obligations, whether gains come from investments or frequent trading activities.
FAQs
How much tax is on trading in India?
For crypto, any profits from trading have a flat 30% tax, regardless of income level. Stock market trading follows different rates based on short-term or long-term gains, usually lower than crypto taxes. If trading crypto, you’ll pay tax every time there’s a profit, and there’s no way to deduct losses against other incomes. And on each trade above ₹50,000 (or ₹10,000 for smaller investors), there’s a 1% TDS which the exchange deducts.
Is crypto legal in India?
Yes, crypto is legal in India, but it’s heavily regulated. The government doesn’t view it as an official currency but as a speculative asset, and taxes it accordingly. Rules for exchanges are strict, especially around AML (Anti-Money Laundering) and KYC (Know Your Customer) checks. Exchanges must report suspicious activity to ensure transparency, and some global platforms face restrictions.
Although buying, holding, and trading crypto is allowed, the Indian government monitors activities closely, especially to prevent illegal use, and has not ruled out further future regulations on cryptocurrency.
How much is GST on cryptocurrency in India?
Right now, no specific GST rate applies to buying or holding crypto, but this may change. If a crypto exchange provides services, they pay GST like other businesses, not traders. The government may add new GST rules in the future, but for now, only income taxes and TDS apply to crypto trades.
Is Binance and Bybit taxable in India?
Yes, earnings from Binance, Bybit, or any crypto exchange are taxable in India. Even though they are international platforms, the Income Tax India rules apply to all gains if you’re an Indian resident.
However, foreign crypto exchanges do not deduct the 1% TDS as Indian platforms do, so you must report those trades accurately. You pay a flat 30% tax on profits made from trading on these platforms, with no deductions allowed.
How to avoid crypto tax in India?
Avoiding tax on crypto in India is tricky since there are few legal options. Holding crypto in your wallet without selling does not trigger taxes, so there’s no need to pay until you sell or trade it. Transferring crypto between your own wallets is also not taxed, as it isn’t seen as a sale. Gifts from close family members are tax-free up to ₹50,000.
Some people use international platforms like Binance for trading, but the tax on profits still applies. Proper tax planning with an accountant is the best way to handle crypto taxes in India without issues.
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