Do you regularly trade or invest in cryptocurrencies or other virtual digital assets?
If you answer yes, you must pay cryptocurrency taxes in India.
But how much are you aware of laws on crypto tax in India? How much are you liable to pay on profits? What about airdrops, minting, mining, or NFTs? And what about crypto donations?
All these situations and scenarios require you to understand the entire crypto landscape of India in detail. Anybody investing in or trading cryptocurrencies or similar assets is supposed to pay crypto tax in India.
But how much?
And what about the different types of transactions? How does tax on crypto in India works?
How Is Cryptocurrency Taxed In India?
In 2022’s financial budget, the Indian government introduced a bill introducing a crypto tax in India. India considers crypto to be a virtual digital asset and levies 30% tax (with 4% cess and any applicable surcharge) on profits from trading cryptos.
Crypto Tax in India: Key Regulations
Here’s a breakdown of the key provisions under the Income Tax Act that govern how cryptocurrencies are taxed in India:
- Section 2(47A) – VDA Definition: Defines Virtual Digital Assets (VDAs), covering all cryptocurrencies, NFTs, and tokens under the Income Tax Act.
- Section 115BBH – Flat Tax & No Loss Set-off: A flat 30% tax (plus 4% health and education cess) applies on all gains from VDA transfers. No deductions are allowed except the cost of acquisition. Moreover, losses from crypto cannot be offset against any other income.
- Section 158B – Undisclosed Income: VDAs are now included in the definition of undisclosed income. Unreported crypto holdings discovered during tax searches are taxed at 60% under block assessment, with a 12-month (from the end of quarter) retrospective audit window and no deductions allowed.
- Section 194S – TDS on Transfers: A 1% Tax Deducted at Source (TDS) applies on VDA transfers exceeding INR 10,000 in a financial year (INR 50,000 for individuals without business income). Applies to both Indian and foreign exchanges.
- Section 271C – TDS Penalty: Failure to deduct TDS attracts a penalty equal to the unpaid TDS amount.
- Section 276B – Evasion Penalty: Failure to remit TDS to the government can result in imprisonment of 3 months up to 2 years and a fine.
- GST Act – GST on Exchanges: From July 7, 2025, an 18% GST applies to platform service fees charged by crypto exchanges, over and above the 30% tax and 1% TDS.
Latest Updates On Crypto Tax India
Here is how crypto tax laws in India have evolved over time:
FY 2025–26: Budget 2026 Updates
- New Reporting Penalties (Section 446): A penalty of INR 200 per day applies for late crypto transaction reporting by exchanges and reporting entities. An additional INR 50,000 penalty applies for incorrect or uncorrected information. Both effective April 1, 2026.
- Reduced Criminal Liability (Section 276B): Budget 2026 reduced maximum imprisonment for TDS defaults from 7 years to 2 years. Courts can now convert imprisonment sentences into monetary penalties, a significant relief for non-compliant P2P traders.
- CARF Adoption Confirmed: India has confirmed adoption of the Crypto-Asset Reporting Framework (CARF) from April 2027, joining 52 nations for automatic cross-border exchange of crypto transaction data.
- Digital Records Now Inspectable: From April 2026, app logs, wallet data, and digital records are inspectable during Income Tax raids.
FY 2024–25: Budget 2025 Updates
- Finance Act 2025 Enacted: The Finance Bill 2025 has been passed into law.
- VDAs Under Undisclosed Income (Section 158B): VDAs are now explicitly included in the definition of undisclosed income. Unreported crypto holdings discovered during tax searches are taxed at 60% under block assessment, with a 12-month retrospective audit window and no deductions allowed.
- Schedule VDA Mandatory: From FY 2025–26, crypto gains must be reported under the Schedule VDA section in ITR forms. Exchanges and entities involved in crypto are required to submit detailed reports to tax authorities to ensure compliance and avoid penalties.
FY 2023–24: Budget 2024 Updates
- Schedule VDA Introduced in ITR: The ITR for FY 2023–24 included a dedicated Schedule Virtual Digital Assets (VDA) section for declaring gains from crypto and other digital assets.
- Filing Deadlines: The filing deadline was July 31, 2024, with the option to file a belated return by December 31, 2024.
- Disclosure Requirements: Individuals investing in crypto must disclose income — as capital gains (ITR-2) if held as investment, or as business income (ITR-3) if traded actively.
FY 2022–23: Budget 2023 Updates
- 30% Flat Tax Introduced: Profits from VDA transactions, including crypto-to-INR conversion, crypto-to-crypto trading, and spending crypto on goods/services, are subject to a flat 30% tax. This is equivalent to India’s highest income tax bracket.
- 1% TDS on Transfers: Transactions exceeding INR 10,000 attract an additional 1% TDS under Section 194S.
- VDAs Defined, Not Currencies: Crypto assets were categorised as “Virtual Digital Assets” under Section 2(47A) — not as central bank-backed currencies.
- Penalties for Non-Compliance Introduced: Sections 271C and 276B established penalties for failure to deduct or remit TDS.
CARF: India Joins Global Crypto Data Sharing (April 2027)
The CARF is an OECD-developed global standard for the automatic exchange of crypto transaction data between participating tax authorities. India is among 52 nations set to begin CARF exchanges in April 2027.
India's Regulatory Step
In March 2026, the CBDT issued a notification, amending Rules 114F, 114G, and 114H of the Income Tax Rules, 1962. This brings crypto assets within India’s existing FATCA/CRS reporting framework, treating them as reportable financial assets.
What does this Mean for Indian Investors?
Holdings on foreign platforms such as Binance, Bybit, and OKX will become automatically visible to the Indian Income Tax Department. Both crypto-to-fiat and crypto-to-crypto transactions are covered. Retroactive reporting of past transactions remains a possibility, making it critical for investors to ensure all offshore holdings are accurately disclosed.
The 30% Tax Rate On Cryptocurrency In India
The 2024 Indian Financial Budget introduced us to a pretty hefty tax rate on the cryptocurrency forefront. This 30% tax rate applies to the following:
- Trading cryptocurrencies with INR
- Exchanging cryptocurrencies for other cryptocurrencies
- Spending cryptocurrencies for goods or services.
Even though the 30% tax rate applies to trading, selling, or spending cryptos, plenty of other events are taxed differently.
Let’s examine these transactions and discover how crypto tax in India functions.
Let’s explore all these types of transactions and understand how they are taxed in India.
Income Tax On Crypto Transactions
The ITD may consider your cryptocurrency transactions taxable income. In such cases, you must pay taxes at the individual tax rate upon receiving the income. This applies to various scenarios, including:
- Receiving crypto as a gift
- Mining crypto coins
- Receiving payment in cryptocurrency.
- Earning staking rewards.
- Receiving airdrops.
If you later decide to sell, trade or use the tokens acquired through the above scenarios, you will have to pay a CGT tax of 30% on any gains you make.
Individual Tax Rates for FY 2025-2026
Here’s the tax slab presented in the budget for 2025 for people aged up to 60:
|
Old Tax Regime |
New Tax Regime |
||
|
Income Tax Slab |
Income Tax Rate |
Income Tax Slab |
Income Tax Rate |
|
Up to INR 2,50,000 |
Nil |
Up to INR 4,00,000 |
Nil |
|
INR 2,50,001 – INR 5,00,000 |
5% of the excess of INR 2,50,000 |
INR 4,00,001 – INR 8,00,000 |
5% of the excess of INR 4,00,000 |
|
INR 5,00,001 – INR 10,00,000 |
INR 12,500 + 20% of the excess of INR 5,00,000 |
INR 8,00,001 – INR 12,00,000 |
INR 20,000 + 10% of the excess of INR 8,00,000 |
|
Above INR 10,00,000 |
INR 1,12,500 + 30% of the excess of INR 10,00,000 |
INR 12,00,001 – INR 16,00,000 |
INR 60,000 + 15% of the excess of INR 12,00,000 |
|
INR 16,00,001 – INR 20,00,000 |
INR 1,20,000 + 20% of the excess of INR 16,00,000 |
||
|
INR 20,00,001 – INR 24,00,000 |
INR 2,00,000 + 25% of the excess of INR 20,00,000 |
||
|
Above INR 24,00,000 |
INR 3,00,000 + 30% of the excess of INR 24,00,000 |
||
Income Tax Slab for Citizens Aged Between 60 and 80 Years
Here’s the tax slab presented in the budget for 2025 for people aged between 60 and 80 years:
|
Old Tax Regime |
New Tax Regime |
||
|
Income Tax Slab |
Income Tax Rate |
Income Tax Slab |
Income Tax Rate |
|
Up to INR 3,00,000 |
Nil |
Up to INR 4,00,000 |
Nil |
|
INR 3,00,001 – INR 5,00,000 |
5% of the excess of INR 3,00,000 |
INR 4,00,001 – INR 8,00,000 |
5% of the excess of INR 4,00,000 |
|
INR 5,00,001 – INR 10,00,000 |
INR 10,000 + 20% of the excess of INR 5,00,000 |
INR 8,00,001 – INR 12,00,000 |
INR 20,000 + 10% of the excess of INR 8,00,000 |
|
Above INR 10,00,000 |
INR 1,10,000 + 30% of the excess of INR 10,00,000 |
INR 12,00,001 – INR 16,00,000 |
INR 60,000 + 15% of the excess of INR 12,00,000 |
|
INR 16,00,001 – INR 20,00,000 |
INR 1,20,000 + 20% of the excess of INR 16,00,000 |
||
|
INR 20,00,001 – INR 24,00,000 |
INR 2,00,000 + 25% of the excess of INR 20,00,000 |
||
|
Above INR 24,00,000 |
INR 3,00,000 + 30% of the excess of INR 24,00,000 |
||
Income Tax Slab for Citizens Aged Above 80 Years
Here’s the tax slab presented in the budget for 2025 for people aged above 80 years:
Old Tax Regime | New Tax Regime | ||
Income Tax Slab | Income Tax Rate | Income Tax Slab | Income Tax Rate |
Up to INR 5,00,000 | Nil | Up to INR 4,00,000 | Nil |
INR 5,00,001 – INR 10,00,000 | 20% of the excess of INR 5,00,000 | INR 4,00,001 – INR 8,00,000 | 5% of the excess of INR 4,00,000 |
Above INR 10,00,000 | INR 1,00,000 + 30% of the excess of INR 10,00,000 | INR 8,00,001 – INR 12,00,000 | INR 20,000 + 10% of the excess of INR 8,00,000 |
INR 12,00,001 – INR 16,00,000 | INR 60,000 + 15% of the excess of INR 12,00,000 | ||
INR 16,00,001 – INR 20,00,000 | INR 1,20,000 + 20% of the excess of INR 16,00,000 | ||
INR 20,00,001 – INR 24,00,000 | INR 2,00,000 + 25% of the excess of INR 20,00,000 | ||
Above INR 24,00,000 | INR 3,00,000 + 30% of the excess of INR 24,00,000 | ||
Understanding Crypto TDS
TDS Rate: 1% on the sale/transfer of VDAs.
Effective From: July 1, 2022.
Applies When: Annual transaction value exceeds ₹10,000 (or ₹50,000 for specific individuals).
Responsibility:
- Indian exchanges auto-deduct TDS.
- Foreign exchange users must deduct and file TDS manually.
- P2P buyers must manually deduct and file TDS.
Purpose: TDS ensures crypto trades are traceable and taxes are collected at the source.
Note: Failure to deduct or remit TDS can result in heavy penalties and jail time under Sections 271C and 276B.
Tax Deductible at Source (or TDS) was introduced alongside India’s 30% crypto tax under the Financial Budget 2022.
TDS aims to charge crypto investors and traders at the source for any transactions they make. When TDS is deducted, a person (the deductor) who owes a specific amount to another person or party (deductee) must deduct the TDS amount from the total invoice value/ payment at the source and remit it to the central government.
This TDS amount on crypto in India is deducted at 1%.
Since July 01, 2024, the buyer will deduct TDS at the 1% rate when paying the seller for the transfer of Crypto/NFT. If the transaction is made on an exchange, the exchange might deduct the TDS and pay the remaining balance amount to the seller.
Indian exchanges automatically deduct the TDS.
However, If a taxpayer trades on foreign exchanges, they must manually deduct TDS and file their TDS returns.
The TDS on cryptocurrency in India might be a dynamic approach as it might change over time. However, we can now understand the implications of this 1% TDS and how it affects you and your crypto trades.
New Penalties For Non-Compliance With TDS In The Crypto Space
Crypto investors in India are facing significant consequences. This follows the recent announcement by the Indian government, emphasising strict measures against traders not adhering to TDS rules.
Under the new regulations, failure to deduct and pay TDS to the government can result in penalties. This can be as grave as amounting to 100% of the TDS value.
In some instances, offenders may also be subject to imprisonment. The period designated ranges from 3 months to 7 years, along with a fine.
Let’s delve into the details of the legislation with illustrative examples.
Section 271C: Penalty For TDS Deduction Failure
If taxpayers neglect to deduct TDS, they may be penalised. This penalty is equivalent to the TDS amount due, as determined by the Joint Commissioner.
Example:
Aman bought Bitcoin worth INR 100,000. According to Section 194S, he must deduct 1% TDS before paying the seller.
If Aman fails to deduct the 1% TDS (INR 1,000) and submit it to the government. In such a case, he could face an INR 1,000 penalty imposed by the Joint Commissioner
Section 276B: Failure To Remit TDS To The Government
Any taxpayer failing to remit TDS to the government may face imprisonment of up to 2 years and a fine. Following the Budget 2026 amendment, the maximum imprisonment period for TDS defaults has been reduced from 7 years to 2 years.
Courts now have the discretion to convert imprisonment sentences into monetary penalties. Upon application by the ITD and with the prior approval of the Joint Commissioner, the court can impose either a fine or imprisonment, or both.
Example:
Let’s consider the above example. Aman deducted 1% TDS (INR 1,000), however, he failed to deposit it with the government. Under the revised provisions, Aman could potentially face imprisonment of up to 2 years and/or a fine, with the court having the option to convert the sentence into a monetary penalty.
These new measures underscore the government’s commitment to enforcing TDS compliance in the crypto sector. It also urges investors to diligently follow the rules to avoid severe penalties and legal consequences.
Tax On Lost Or Stolen Cryptos
The Income Tax Department has not provided explicit guidance regarding lost or stolen cryptocurrencies. Drawing insights from past rulings by Indian courts on the loss or theft of different types of assets, it appears that no tax liability is incurred on crypto that is lost due to hacking, scams, or theft.
Despite this, claiming and offsetting a loss from a lost or stolen crypto asset against gains might be challenging. This is due to the ITD’s strict position on such offsetting.
However, investors should be aware that even though there may not be a tax obligation for the lost crypto, offsetting losses against gains might face hurdles according to the ITD’s stringent approach.
Transactions That Are Free of Cryptocurrency Tax In India
Not every transaction is subject to crypto tax in India. Here’s a breakdown of when you won’t have to pay taxes on your crypto:
HODLing Crypto
Holding onto your cryptocurrency without engaging in any transactions is tax-free in India.
Transferring Crypto Between Your Wallets
Moving your crypto assets between your wallets also does not attract liabilities.
Receiving Gifts Of Crypto
You can receive crypto gifts without worrying about taxes under the following circumstances:
- Receiving a gift of crypto up to INR 50,000 from friends and relatives.
- Receiving a gift of any amount of crypto from close family members.
Hence, if you are holding onto your crypto, transferring it between your wallets, or receiving crypto gifts within the specified limits from friends and relatives, you won’t be required to pay taxes on these transactions in India.
Crypto Tax Breakdown by Transaction Type in India
Understand how different types of crypto transactions are taxed under Indian law.
This quick-reference table outlines the tax treatment, applicable tax rates, and key compliance rules for each category, from airdrops and mining to NFT trading and P2P transfers.
Transaction Type | Tax Type | Tax Rate | Quick Summary |
Tax On Airdrops | Income + Capital Gains | Slab rate + 30% CGT | Taxed as income on receipt; CGT on sale of airdropped tokens. |
Tax On NFT Trading | Capital Gains + TDS | 30% CGT + 4% cess + 1% TDS | Fiat NFT buys are not taxed; crypto swaps & sales attract CGT & TDS. |
Tax On Mining | Income + Capital Gains | Slab rate + 30% CGT | Rewards taxed as income; CGT applies on sale; deductions if business income. |
Tax On Staking | Income + Capital Gains | Slab rate + 30% CGT | Staking rewards are taxed as income; sales are taxed under 30% CGT. |
Tax On Crypto Gifts | Income | Slab rate (if > ₹50K) | Gifts from family or < ₹50K are tax-free; others are taxed as income. |
Tax On Crypto Salary | Income + Capital Gains | Slab rate + 30% CGT | Salary in crypto is taxed as income; disposal is taxed at 30% CGT. |
Tax On Crypto Donations | Capital Gains | 30% CGT + 4% cess | Donating crypto = disposal; taxed under CGT provisions. |
Tax On Referrals | Income + Capital Gains | Slab rate + 30% CGT | Referral rewards are taxed on receipt and sale. |
Tax On Token Sales (ICO/IDO) | Income + Capital Gains | Slab rate + 30% CGT | Airdrops are taxed as income; later sales are taxed under CGT. |
Tax On Futures/Derivatives | Business Income + CGT + TDS | Slab rate + 30% CGT + 1% TDS | Gains are taxed as business income; INR conversion gains are taxed under CGT + TDS. |
Spot & Margin Trading | Capital Gains + TDS | 30% CGT + 4% cess + 1% TDS | Flat 30% tax; no offsets; 1% TDS applies. |
DeFi Income | Income + Capital Gains | Slab rate + 30% CGT | DeFi rewards are taxed as income; CGT applies on use/sale. |
Income from Crypto Consultancy | Income + Capital Gains | Slab rate + 30% CGT | Crypto consulting income is taxable; CGT on token disposal. |
P2P Transactions | Capital Gains or Block Assessment | 30% CGT | Missing KYC may trigger a 60% tax under block assessment. |
Now, let’s break down how each type of crypto transaction is taxed in India, along with examples, rules, and key things to keep in mind.
Whether you’re a trader, investor, or someone receiving crypto as income, understanding the nuances can help you stay compliant and avoid costly mistakes
Tax On Airdrop
Airdrops are the initial tokens or coins you usually receive before a crypto project starts.
In India, crypto airdrops are treated as “Income from Other Sources” and are taxed according to the individual tax slab. This tax is calculated based on the fair market value of the tokens when you receive them, even though you didn’t buy them.
Later, if you sell, swap, or use the airdropped tokens, you’ll be subject to a flat capital gains tax rate of 30%.
This tax is applied to the difference between the fair market value on the sale date and the value when you received the airdrop, with an additional 4% health and education cess.
Example:
Ravi received 10,000 ABC tokens for holding 100 XYZ tokens, on April 1st, 2025. On that day, the fair market value of ABC tokens was INR 10.
Ravi will be liable to pay tax at his slab rate on the ABC tokens he received, so he’ll pay Income Tax on INR 1,00,000.
Important: Crypto airdrops are considered gifts for tax purposes and could be eligible for tax exemption. However, you will qualify for a tax exemption if the total value of airdrops and gifts you receive in a year is within Rs 50,000.
Tax On NFT Trading
Non-fungible tokens (or NFTs) are taxed based on the nature of the transaction. Here’s how NFT taxes function in India:
Buying NFTs with Fiat Currency
Buying NFTs with fiat currencies such as INR or USD isn’t taxable.
Buying NFTs with Cryptocurrency
Buying NFTs using cryptocurrencies such as Ethereum and Polygon Matic is taxable. This exchanging of cryptocurrency for NFTs is considered an act of crypto disposal. Any gain from this transaction will be taxed at a flat rate of 30% plus a 4% health and education cess.
Selling NFTs
Any gains enjoyed on selling NFTs will also be taxed at a flat rate of 30%. One must also pay a 4% cess on the Capital Gains Tax amount. The buyer will also deduct a 1% TDS of the selling amount.
Tax On Mining Cryptocurrency
Crypto mining in India is subject to income tax, with the type of income determined by the scale of mining activities.
If you mine crypto on a significant scale for profit, it’s classified as business income. You’re taxed based on regular slab rates and can claim deductions for expenses like mining rigs and electricity bills.
However, if mining is more of a hobby, the rewards are considered “Income From Other Sources,” and no deductions are allowed.
Selling mined crypto incurs a flat 30% capital gains tax rate plus a 4% health and education cess. Additionally, exchanges may charge a 1% TDS on sales.
Tax On Crypto Staking
Staking cryptocurrency in India incurs income tax on the fair market value of the staking rewards received in INR, and will be taxed according to the individual income slab rate. This applies regardless of whether you sell the tokens.
Additionally, any profits from selling, swapping, or spending staking rewards are subject to a 30% capital gains tax plus a 4% health and education cess.
Furthermore, a 1% TDS is applicable on the selling price of the cryptocurrency deducted by the buyer.
Example:
Assume you stake 100 “X” coins to a validator that offers a 10% APR. Every year, you will receive 10% interest on your asset. This means your net asset will be 100+(100×10%)= 110 after one year. That implies you’ll receive 10÷365= 0.027% interest every day or 10÷12= 0.833% interest per month.
Tax On Crypto Gifts
As per the Indian Tax Department, crypto gifts are movable property gifts. Hence, here are the types of crypto gifts that do not attract any taxes in India:
- You do not have to pay taxes if you’ve received cryptocurrency gifts valued below INR 50,000 in a financial year.
- Crypto gifts from immediate family members, such as parents or siblings, do not incur crypto taxes in India.
- Crypto gifts received as wedding gifts, inheritances or in contemplation of death also remain tax-free in India.
However, if you have received crypto gifts exceeding the value of INR 50,000, then you will have to pay Income Tax based on the individual slab rate.
Tax On Crypto Salary
When you receive cryptocurrency as a salary in India, it’s taxed like any other income received in INR.
You pay income tax based on the cryptocurrency’s market value converted to Indian Rupees on the day you receive it, according to your income tax slab.
If you sell, exchange, or relinquish the cryptocurrency received as a salary, it’s treated as disposal and taxed at a flat rate of 30%, plus a 4% cess on the taxable amount.
Additionally, a 1% TDS is deducted by the buyer on the selling price of the cryptocurrency.
Tax On Crypto Donations
In India, crypto donations are taxed similarly to other cryptocurrency transactions. This means that any cryptocurrency donations are subject to capital gains tax.
Capital gains tax applies to profits made from selling or exchanging cryptocurrencies.
Donating crypto in India is seen as disposing of digital assets, and any resulting gains are taxed at a flat rate of 30%, plus a 4% health and education cess.
Tax On Crypto Referrals
In India, referral rewards earned through cryptocurrency are considered additional income. The tax rate on the fair market value of the cryptocurrency received depends on the individual income tax slab rate.
When you sell, swap, or use the crypto rewards, you’re subject to Capital Gains Tax (CGT) at a flat rate of 30%, plus a 4% health and education cess on the CGT amount.
Tax On Token Sales (ICOs And IDOs)
Income from ICOs and IDOs, including airdropped coins, is considered “Income From Other Sources” (IFOS).
The tax authorities add the fair market value of received tokens to your annual income and tax it at 0-30%, depending on your tax slab rate.
When you exchange primary tokens like Ethereum and Bitcoin for ICO stakes, you are treating it as a crypto disposal. Profits from selling these tokens are taxed at a flat rate of 30%, plus a 4% health and education cess.
Selling tokens acquired from ICO or IDO airdrops also incurs capital gains tax at the same rate mentioned above.
Tax On Futures/Derivatives Trading
Crypto futures trading involves buying or selling a specified amount of cryptocurrency at a predetermined price for future delivery. You can profit from price movements without owning the actual asset. It offers opportunities for speculation, hedging, and leveraging but carries risks due to market volatility.
Calculating the crypto trading tax in India based on the gains from futures trading can be a task. In India, the taxation of cryptocurrency futures trading involves several key considerations to ensure compliance with tax laws. Here’s a detailed explanation:
Initial Investment Stage
When an investor purchases cryptocurrency like USDT to participate in futures trading, this initial acquisition is treated as an investment. No tax is levied at this stage because it represents the entry point into the trading activity, similar to purchasing stocks or commodities.
Note: A few exchanges allow crypto futures trading in INR.
Profit Realisation and Taxation
Once trading begins and profits are realised, these gains are categorised as speculative business income under Indian tax regulations. The taxable amount is computed based on the difference between the conversion rate used to calculate the profit and the rate at which the initial investment was made.
This ensures that the profit generated from futures trading is accurately reflected and subject to taxation according to the individual’s income tax slab rate.
You maybe eligible to deduct funding fees & brokerage fees.
Example:
Avani trades crypto futures, and here’s how her tax liability is calculated:
Trade Summary:
Buys 1000 USDT @ ₹85 —
No tax at this stage
Makes a profit of 2000 USDT
Profit realised @ ₹86 = ₹1,72,000
This is treated as speculative business income and taxed per her income tax slab.
Other Crypto Trading Tax In India
So, how are other crypto trading taxed in India? Let’s begin with crypto spot trading.
Spot Crypto Trading Tax In India
Crypto spot trading involves buying and selling digital assets for immediate delivery. Transactions occur instantly at the current market price, settling “on the spot” without the need for future delivery contracts. Now comes the question of how it is taxed.
In India, crypto spot trading is taxed uniformly at a flat rate of 30%, plus a 4% health and education cess under Section 115BBH of the Income Tax Act. This taxation applies irrespective of the holding period, eliminating distinctions between short-term and long-term gains. A 1% TDS is applicable on sale transactions exceeding Rs. 50,000 annually, starting July 1, 2022, covering the entire sale value.
Importantly, no deductions or exemptions are permitted. This is in exception for the cost of acquiring the crypto asset, preventing offsetting losses from one trade against gains from another.
Margin Crypto Trading Tax In India
Crypto margin trading allows you to borrow funds, magnifying your market exposure beyond your initial investment. Using leverage, you can amplify profits and increase the risk of substantial losses.
Crypto gains, including those from margin trading, face cryptocurrency taxation in India as income from virtual digital assets (VDAs) under Section 115BBH of the Income Tax Act, 1961. Brace yourself for a flat 30% tax rate, applicable surcharge and a 4% cess.
Now, let’s delve into the details of margin trading taxation.
Profits incurred from closing leveraged positions are subject to the 30% VDA tax. This is calculated as the sale price minus the acquisition cost, which includes borrowed funds.
Unfortunately, VDA losses can’t offset other income categories and can only be carried forward for eight years. Forced liquidations due to margin calls are taxable events, with the sale price determining the profit or loss. Also, gains from crypto derivatives fall under the 30% VDA tax slab.
Starting July 1, 2022, a 1% TDS applies to cryptocurrency transfers exceeding INR 50,000 (or INR 10,000 for specific categories) on exchanges. It’s essential to note that this TDS isn’t your final tax liability but serves as an advance payment. Stay informed and navigate the crypto tax landscape with caution.
Tax On DeFi Income In India
The ITD has yet to provide specific instructions regarding decentralised finance (DeFi) transactions. To understand the tax implications, we should look at the current rules outlined in the Income Tax Act.
Here are some DeFi transactions that might be subject to taxation at your tax rate:
- Earning New Tokens: This includes tokens gained through liquidity mining, governance activities, or as rewards.
- Referral Rewards: Any rewards received through referral programs may be taxable.
- Play-To-Earn Income: Income generated from play-to-earn activities within the DeFi space could be subject to taxation.
- Browse-to-Earn Platforms: Platforms such as Permission.io or Brave, where users earn rewards for browsing, may also have tax implications.
Even if you paid taxes upon receiving the tokens, it’s important to remember that you may still be subject to a 30% CGT tax on any profits if you sell, swap, or spend them later.
Tax On Income From Consultancy Services
Income from consultancy in crypto refers to earnings generated by providing expert advice and guidance in the cryptocurrency industry. Crypto consultants offer insights on trading strategies, market analysis, blockchain technology, and regulatory compliance. They often charge fees for their services, which contributes to their income in the rapidly evolving cryptocurrency space.
If earned in cryptocurrency, consulting income is subject to taxation as business income, as per the Income Tax Department (ITD). The applicable tax rate depends on the individual’s tax slab. A person can claim any necessary deductions from the same.
Additionally, GST returns must be filed if eligible. Selling tokens later incurs a Capital Gains Tax (CGT) of 30% and a 4% cess on the tax amount. Stay informed about tax obligations in the dynamic crypto landscape to ensure compliance.
Crackdown on P2P Crypto Transactions
How P2P Transactions Are Taxed in India
Profits from P2P crypto trades are subject to a 30% flat tax under Section 115BBH, along with 1% TDS on transactions above INR 10,000 — the same rate that applies to any other VDA transfer.
The 60% block assessment under Section 158B is a separate provision that applies specifically to undisclosed income discovered during tax searches or raids. It does not automatically apply to P2P trades simply because KYC details are missing.
However, if a P2P transaction cannot be explained or documented during an ITD inquiry, it may be reclassified as undisclosed income, triggering the higher 60% tax rate, penalties, and a 48-month retrospective audit window.
Real-World Cases Under Scrutiny
Investors have been penalised even for small gains due to missing documentation. For example, one trader made a profit of ₹1,500 but was asked to pay ₹78,000 in penalties because he couldn’t furnish verified PAN details of the P2P buyer.
Crypto Tax For NRIs (Non-Resident Indians)
India’s crypto tax framework under Section 115BBH applies based on the source of income, not just residency. NRIs who earn from crypto assets associated with India remain subject to Indian tax obligations.
Residential Status & Tax Liability
Residential status under Section 6 of the Income Tax Act determines your tax obligations in India. NRIs are taxed only on income earned or accrued in India. If an NRI trades crypto on an Indian exchange or receives crypto income from an Indian source, the 30% flat tax under Section 115BBH applies.
DTAA Applicability
India has Double Taxation Avoidance Agreements (DTAA) with several countries. NRIs may be able to claim relief under the applicable DTAA type and article number to avoid being taxed twice on the same crypto income — once in India and once in their country of residence. A tax professional should be consulted to determine DTAA eligibility for specific situations.
Filing Obligations
NRIs with taxable crypto income in India must file an ITR using ITR-2 (investment) or ITR-3 (business income). Upon returning to India permanently, previously offshore crypto holdings may become reportable under Indian tax law, and any undisclosed holdings could attract scrutiny under Section 158B.
Offshore Exchange Holdings
With CARF implementation from April 2027, offshore crypto holdings on platforms like Binance, Bybit, and OKX will become automatically visible to the Indian Income Tax Department, making disclosure critical for NRIs with foreign exchange accounts.
How To Make Your Tax Filing Convenient With KoinX?
We at KoinX offer a comprehensive taxation tool that easily integrates with your preferred exchange(s) and gives you a detailed report about your tax obligations. You can use this report to file your crypto taxes easily.
With its easy-to-navigate UI, simple exchange integration, and various features, our KoinX is on its way to becoming one of India’s fastest-growing crypto taxation platforms.
The feature of importing tax data gives you a slight advantage over other platforms. This is because you can easily forward this information to your tax advisor, who helps you file your taxes.
Which ITR Should I File?
But which ITR form to file? This question needs to be clarified for most crypto tax investors.
If you earn cryptos using crypto staking, mining, as a salary, or trading, you should file an ITR-2. Our detailed guide on how to file an ITR-2 online can help you do so. Moreover, if you are mining, staking or farming crypto on a business level, you must file ITR-3. You can check out our latest guide on how to file an ITR-3 online.
How To File Crypto Tax in India With KoinX?
Let’s now explore how to file crypto taxes in India with KoinX. There are two ways to file crypto taxes in India: self-filing and a chartered accountant’s help.
Step 1: Login To Your KoinX Account
The first step is to register or login to your KoinX account.
Step 2: Integrate Your Accounts
Once logged in, you must integrate all your crypto wallets and exchanges on your profile for KoinX to import its data. We support integrations from over 270 exchanges, wallets, and blockchains
Step3: Generate Tax Report
Once you have integrated all your accounts, you must generate your crypto tax report. Click on Taxes and then press “Generate Tax Report.”
You can download the file in either PDF or Excel format. Your KoinX tax report is ITR-compliant.
Use KoinX’s end-to-end filing assistance; you can purchase our bundle plan, which offers accurate crypto tax reports and a dedicated tax professional for ITR filing.
If you want to self-file your ITR, you can choose our basic payment plans based on the number of transactions you clock in a single financial year.
If you have bought our bundle plans, you don’t have to do anything after generating the tax reports; we will assign your case to one of our expert CAs, and the rest will be taken care of.
Step 4: Log-In To Income Tax Protal
If you want to self-file your ITR, visit income tax portal and login to your account. Click e-file > Income Tax > File Income Tax Return.
Then choose the Assessment Year > Online (as filing mode) > Continue.
Now, select Individual > Continue. Under “I know which ITR Form I need to file,” select “ITR-2” or “ITR-3.”
Step 5: Report Your Capital Gains and Other Income
Click on Select Schedule > Income > Schedule VDA. Use Schedule VDA section from KoinX tax report to fill in each transaction on the profile. If you have other sources of income other than capital gains, click Schedule Income from Other Sources.
Step 6: Verify Your Income Tax Return
Once you are satisfied with all your input click Submit and verify your return. Click Proceed for Verification and enter the OTP received on registered mobile number linked to your Aadhaar Card.
Conclusion
Navigating India’s crypto tax rules can be daunting, but accurate reporting is crucial to avoid penalties. A flat 30% tax on crypto gains, 1% TDS on transfers, and strict disclosure requirements mean you must track every transaction.
KoinX simplifies this process by integrating your wallets and exchanges, generating ITR-ready Schedule VDA reports, and offering expert support. With KoinX handling data consolidation and compliance, you save time, reduce errors, and stay audit-ready.
End tax-season stress, generate your report today and file your returns confidently and on time.
Frequently Asked Questions
Let’s answer some of the frequently asked questions about crypto tax India:
Is GST Applicable To Crypto Transactions In India?
Is GST Applicable To Crypto Transactions In India?
The Indian government’s stance on applying the Goods and Services Tax (GST) to cryptocurrency remains unclear. The existing GST Act needs to address VDAs, leading to ambiguity. Top Indian crypto exchanges actively seek clarification on whether GST should be imposed on crypto assets and who should be responsible for collecting it.
Can ITD Track Your Crypto Transactions?
The ITD utilises KYC data from domestic exchanges and a 1% Tax Deducted at Source (TDS) to monitor individuals’ crypto holdings, enhancing tax compliance efforts. This allows the ITD to request exchange data to track taxpayers’ assets accurately, streamlining the process.
When Do I Report Crypto Taxes To The Income Tax Department?
In India, the financial year runs from April 1st to March 31st. The current financial year, FY 2024-25, spans from April 1st, 2024, to March 31st, 2025. Taxpayers must file for belated returns by July 31st, 2025 (non-audit cases), October 31st, 2025 (audit cases), or December 31st, 2025.
Which Cost Basis Method Is Accepted In India?
In India, the financial year runs from April 1st to March 31st. The current financial year, FY 2025-26, spans from April 1st, 2024, to March 31st, 2025. Taxpayers must file for belated returns by July 31st, 2025 (non-audit cases), October 31st, 2025 (audit cases), or December 31st, 2025.
Can You Offset Your Crypto Losses In India?
Indian investors face a setback as Section 115BBH bars offsetting crypto losses against gains or other income. Additionally, claiming crypto-related expenses is restricted and limited only to the cost of acquisition. This poses challenges for those seeking to mitigate losses and expenses in the crypto market.
