The Indian Income Tax Department(ITD) has not issued any detailed guidance for cryptocurrency taxation. However, the income tax act contains key provisions such as Section 115BBH and Section 194S. These sections govern taxation on cryptocurrency and other virtual digital assets(VDAs). Profits from VDAs are generally subject to a flat 30% tax, 1% TDS on certain transactions, and income tax at individual slab rates for non-trading income. In this article, you will learn everything about crypto tax in India 2024, including ITR filing, reporting gains in Schedule VDA, TDS obligations, and the latest updates.
What are Cryptocurrencies?
Cryptocurrencies are digital or virtual currencies. These currencies use cryptography for security. As a result, it makes it difficult to counterfeit or double-spend. They operate on decentralized blockchain networks rather than being issued by governments. Cryptocurrencies can be used for peer-to-peer transfers, remittances, cross-border payments, trading, and long-term investments. Popular cryptocurrencies include Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Ripple (XRP), and thousands of altcoins that continue to emerge.
Is cryptocurrency taxed in India?
Yes, since the budget 2022, cryptocurrencies are recognized as Virtual Digital Assets. The government as a result introduced a new regime specifically for VDAs to bring transparency and discourage tax evasion. The key highlights were 30% tax on gains from selling, trading, or spending crypto, 1% TDS on transactions exceeding ₹50,000 (or ₹10,000 in some cases), and income from staking, mining. Or airdrops taxed at your individual slab rate.
Crypto Tax Rates in India
| Section | Tax Description | Details |
| 115BBH | 30% flat tax on VDA gains | Applies from April 1, 2022, to profits from trading, selling, or using crypto. Includes 4% cess. |
| 194S | 1% TDS on VDA transfers | Applies from July 1, 2022, for transactions > ₹50,000 (₹10,000 for some taxpayers). Deducted by exchange or buyer. |
Must know updates on Crypto Tax in India
2024: Schedule VDA introduced in ITR for FY 2023-24 to report gains from cryptocurrencies. ITR Filing Deadline: July 31, 2024; belated filing by Dec 31, 2024.
2023: Crypto income must be declared as capital gains (investment) or business income (trading). Traders use ITR-3, investors use ITR-2. Penalties apply for failure to deduct or deposit TDS.
2022: Section 115BBH: Losses on VDAs cannot offset gains from other VDAs or income sources. Gifts of digital assets are taxable for the recipient. Flat 30% tax on gains effective April 1, 2022. Section 2(47A) introduced to define Virtual Digital Assets.
Crypto Transactions & Tax Implications in India
| Transaction Type | Tax Impact |
| Buying crypto (fiat to crypto) | Tax-free, 1% TDS applicable |
| Selling crypto | 30% tax on gains + 1% TDS |
| Trading crypto for crypto | 30% tax on gains + 1% TDS |
| Spending crypto | 30% tax on gains |
| Holding crypto (HODLing) | Tax-free |
| Transferring between your own wallets | Tax-free |
| Airdrops | Income tax at slab rate; 30% tax if sold later |
| Hard forks | Income tax at slab rate; 30% tax if sold later |
| Gifts of crypto | Taxable for recipient (>₹50,000), exceptions for close family |
| Donations | 30% tax on any gain; not deductible |
| Mining rewards | Income tax at slab rate; 30% tax if sold later |
| Staking rewards | Income tax at slab rate; 30% tax if sold later |
Special Cases for Other Virtual Digital Assets Taxation in India
DeFi (Decentralized Finance): Income from liquidity mining, lending, governance tokens, or play-to-earn platforms is taxed at individual slab rates when received. Profits from disposal are taxed at 30%.
Gifts of Crypto: Gifts from close relatives including crypto currency at or under ₹50,000 are tax-free. Gifts from others exceeding ₹50,000 are taxable at slab rates.
Lost/Stolen Crypto: The income tax department has not issued guidance related to stolen or lost crypto. However, most tax experts believe such losses cannot be offset against gains in income tax return filing.
How to Calculate Taxation on cryptocurrency in India
Determine Cost Basis: Amount paid to acquire crypto or fair market value when received. Transaction fees and charges are not deductible. Then understand through following examples:
Example 1: Investor Case
If you bought 1 ETH for ₹1,00,000 and later sold it for ₹1,50,000, your gain is ₹50,000, taxed at 30% = ₹15,000, plus cess.
Example 2: Trader Case
If you frequently buy and sell crypto, tax laws treat your profits as business income, and you must file ITR-3. You cannot offset losses from one trade against gains in another crypto.
Mining & Staking Taxation
Mining Rewards: Taxed at slab rate on fair market value at receipt. Later profits on sale are taxed at 30%.
Staking Rewards: Taxed at slab rate when received. Subsequent profits on disposal are taxed at 30%. Example: If you earn 0.5 ETH from staking, valued at ₹80,000, you pay slab-rate tax. If you later sell at ₹1,00,000, the extra ₹20,000 is taxed at 30%.
1% TDS on Crypto Transactions
1% TDS on Crypto Transactions exceeding ₹50,000 (₹10,000 in special cases) is also in effect. Indian crypto exchanges deduct the TDS on your transactions automatically. However, in P2P or foreign exchange trades, the buyer is responsible to deduct TDS. If you don’t, the Section 271C: penalty for failure to deduct TDS. Section 276B: penalty for failure to deposit deducted TDS (can include imprisonment up to 7 years) will be applied.
ITR Filing for Crypto in India
- Investors can report crypto as capital gains(ITR-2).
- Traders can report it as business income.(ITR-3)
Penalties and Compliance for Cryptocurrency Taxation in India
- Non-filing of crypto income: penalty + interest.
- Failure to deduct/deposit TDS: fines + possible prosecution.
- Misreporting crypto as other income: risk of notice and reassessment.
FAQs on Taxation On Cryptocurrency in India
Do NRIs pay crypto tax in India?
Yes, if they trade through Indian exchanges or if the income is sourced in India.
Are crypto-to-crypto trades taxed?
Yes, both legs of the trade are taxable.
Does GST apply to crypto?
Exchanges charge 18% GST on trading fees/commissions, but GST is not levied directly on buying crypto.
Can I offset crypto losses?
No, losses from VDAs cannot offset gains from other VDAs or income.
Do I need to declare holdings if I haven’t sold?
You don’t have to pay tax on holdings, but you must disclose them in your ITR if they are significant.
Key Takeaways for Indian Crypto Investors
Crypto gains are taxed at 30% under Section 115BBH. 1% TDS ensures traceability of transactions. Buying and holding crypto is tax-free, but selling, trading, or spending it attracts tax. Rewards from mining, staking, or airdrops are taxed at slab rates and again at 30% when sold. Schedule VDA is mandatory in ITR filing from FY 2023-24. Losses cannot offset gains and investors must stay compliant to avoid penalties and scrutiny.
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