Crypto Is Here, But So Are the Taxes
By now, crypto isn’t just a buzzword—it’s part of how many Indians invest, earn, and even transact. From Bitcoin to NFTs and everything in between, virtual digital assets (VDAs) are booming. But with great gains come great… taxes.
The Indian government has implemented a flat 30% tax on gains from crypto transactions, alongside a 1% TDS. Whether you’re trading, gifting, mining, or staking—it all counts under the tax lens.
Let’s break it down, human to human. No jargon. Just real-world understanding.
Is Crypto Treated as Currency or Asset in India?
Here’s the short answer: It’s not a currency. It’s classified as a Virtual Digital Asset (VDA).
The Income Tax Act’s Section 2(47A) defines crypto, NFTs, and similar digital items as VDAs. While they may behave like money, in the eyes of Indian tax law, they’re taxable assets, not legal tender.
🇮🇳 So, Is Crypto Taxable in India?
Yes, and very much so.
As per the Union Budget 2022, gains from crypto trading or transfers are taxed at 30%, and a 1% TDS is deducted on applicable sales. These rules continue in FY 2024–25.
Let’s look at what’s taxed:
- Selling crypto for INR
- Crypto-to-crypto swaps
- Spending crypto on goods/services
- Mining rewards
- Receiving staking income
- Airdrops
- Gifts received in crypto
- Getting paid in crypto
How Is Crypto Income Taxed in India?
| Type of Income | Tax Rate | Additional Notes |
|---|---|---|
| Profits from selling or trading crypto | 30% + 4% cess | No deductions allowed except cost of purchase |
| TDS on crypto sale | 1% | Applicable if sales exceed ₹50K annually |
| Gifts | Taxed in hands of recipient | Unless from a relative or under exempted events |
| Mining/Staking Rewards | Taxed at FMV | Considered “Income from Other Sources” |
❗ You cannot offset crypto losses against any other income—including other crypto gains.
Let’s Simplify: Crypto Tax Calculation
Here’s the simple formula:
Profit = Sale Price – Purchase Price
Tax = 30% of Profit (flat, no exceptions)
Example:
- Bought BTC for ₹1,00,000
- Sold BTC for ₹1,50,000
→ Gain = ₹50,000
→ Tax = ₹15,000 (30%) + ₹600 (cess)
TDS of 1% will also be deducted when you sell, so always factor that into your expected returns.
Understanding 1% TDS on Crypto: Who Pays It?
Section 194S of the Income Tax Act introduced 1% TDS to ensure traceability of crypto transactions.
| Transaction Type | TDS Deducted By | Platform/Case |
|---|---|---|
| INR to Crypto (Indian Exchange) | The exchange | CoinDCX, WazirX, etc. |
| Crypto-to-Crypto | Both parties | Each deducts 1% |
| Foreign Exchange | Buyer | Manual filing |
| P2P Transfers | Buyer | File Form 26QE/26Q |
Taxation on Airdrops, Mining & Staking
Airdrops:
- Taxed at 30% on FMV when received
- Gains from future sale taxed again (original FMV = cost)
Mining:
- Taxed at FMV as income
- Sale of mined coins = capital gain, cost = FMV on mining date
- Infra/electricity costs not deductible
Staking:
- Rewards are taxable as income
- Selling staked coins = 30% capital gains
- Transferring between wallets = NOT taxable
Tax on Crypto Gifts
If you received crypto as a gift:
| Source | Taxable? |
|---|---|
| From relative | ❌ No |
| From non-relative > ₹50,000 | ✅ Yes (normal slab rates) |
| On marriage/will/inheritance | ❌ No |
Gifted crypto = movable property → taxed under “Income from Other Sources” if thresholds are breached.
What About Losses? Can You Set Off?
Unfortunately, NO.
Crypto losses can’t be offset against:
- Other crypto gains
- Other income (salary, capital gains, etc.)
- Future years’ income
You also can’t deduct platform fees, transaction charges, or electricity bills (in case of mining).
Example:
- Gain: ₹20,000 (BTC)
- Loss: ₹10,000 (ETH) → Tax on ₹20,000 = ₹6,000
→ Loss is not deductible
Reporting Crypto in Your ITR
Crypto gains are now part of Schedule VDA in your Income Tax Return (ITR).
| Scenario | ITR Form |
|---|---|
| Capital gains (investor) | ITR-2 |
| Business income (frequent trader) | ITR-3 |
Make sure to report all wallets, exchanges, and transactions—especially if you use international platforms.
Timeline: Evolution of Crypto Taxation in India
| Year | Event |
|---|---|
| 2013 | RBI issued initial crypto caution notice |
| 2018 | RBI restricted banking access for exchanges |
| 2020 | Supreme Court lifts RBI ban |
| 2022 | Union Budget introduced 30% tax and 1% TDS |
| 2025 | Strict enforcement of VDA rules and Schedule VDA |
Summary Table: Crypto Transactions & Their Tax Impact
| Transaction | Tax Applicable |
|---|---|
| Buy Crypto | 1% TDS |
| Sell Crypto | 30% tax on gains |
| Hold Crypto | No tax until sold |
| Crypto-to-Crypto Trade | 30% tax on gains |
| Receive Airdrop | 30% on FMV |
| Mine/Staking Reward | Taxed on income + 30% on sale |
| Gifts (non-relative) | Normal tax slabs |
| Gifts (relative or marriage) | Exempt |
FAQs
Q1. How much is the tax on crypto in India?
30% flat + 4% cess. Also, 1% TDS applies to transactions over ₹50,000 annually.
Q2. What is Schedule VDA?
It’s a new section in the ITR to report Virtual Digital Asset transactions, including crypto and NFTs.
Q3. How is staking taxed?
Rewards are taxed as income. Sale of staked assets attracts 30% capital gains tax.
Q4. Can I claim losses from crypto?
No. Losses from crypto cannot be set off or carried forward.
Q5. Is buying on Binance or Coinbase covered under TDS?
If you’re interacting with a non-resident (foreign exchange), 194S TDS may not apply, but reporting is still mandatory.
