India’s cryptocurrency landscape has evolved rapidly over the last few years. With millions of investors actively trading in Bitcoin, Ethereum, Solana, and altcoins, the Indian government introduced clear taxation guidelines under the Finance Act 2022 and continues to refine them in 2025.
Whether you’re a seasoned investor or just starting, it’s essential to understand how crypto is taxed in India — to stay compliant, avoid penalties, and plan your portfolio smartly.
🪙 What Is Considered a Virtual Digital Asset (VDA)?
According to Indian tax laws, Virtual Digital Assets (VDAs) include:
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Cryptocurrencies (Bitcoin, Ethereum, Dogecoin, etc.)
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NFTs (Non-Fungible Tokens)
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Any token created on blockchain with transferable value
The Government of India recognizes these under a separate tax regime.
📊 How Is Crypto Income Taxed in India?
💰 1. Flat 30% Tax on Profits
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All gains from crypto transfers are taxed at a flat 30% rate
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No deduction allowed for any expense other than the cost of acquisition
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This applies whether it’s short-term or long-term holding
Example:
If you bought Bitcoin for ₹1,00,000 and sold it for ₹1,80,000:
Taxable profit = ₹80,000
Tax payable = ₹24,000 (30% of ₹80,000)
🧾 2. 1% TDS (Tax Deducted at Source)
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From July 1, 2022, a 1% TDS is applicable on all crypto transactions exceeding ₹10,000 in a financial year
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The exchange (like CoinDCX, WazirX, or CoinSwitch) deducts it at the time of transaction
👉 Read more:
https://incometaxindia.gov.in
💼 3. Gifting Crypto Is Also Taxed
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Crypto received as a gift above ₹50,000 is taxable in the hands of the recipient
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However, gifts from relatives (as defined under IT Act) are exempt
📋 When & Where to Report Crypto Income?
You must disclose your crypto income under the “Income from Other Sources” or “Capital Gains” section in your Income Tax Return (ITR), depending on the nature of transactions.
Crypto tax reporting is mandatory even if:
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You traded but didn’t withdraw
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You swapped one crypto for another
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You’re a long-term holder with unrealized gains (only TDS applies, not tax until sale)
👉 For crypto ITR filing help:
https://cleartax.in
https://zerodha.com/varsity
🔒 Is Loss Set-Off or Carry Forward Allowed?
No. Under Section 115BBH, you cannot:
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Set off crypto losses against other income (e.g., salary, F&O, stocks)
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Carry forward losses to future years
This is unlike other capital assets (like equity shares), where such options exist.
💡 Tips to Save Tax on Crypto Income (Legally)
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✅ Keep a record of all buy/sell transactions
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✅ Use crypto tax calculators or software tools
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✅ Transact through registered Indian exchanges that handle TDS
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✅ File ITR on time to avoid penalties
👉 Tools to track crypto taxes:
https://koinx.in
https://www.zenledger.io
🏦 How Indian Crypto Exchanges Are Handling Taxation
Most Indian crypto platforms like:
Now automatically deduct TDS and issue TDS certificates, which can be claimed during ITR filing.
Always ensure your PAN is updated on these platforms to avoid higher TDS deduction.
⚠️ Penalties for Non-Compliance
If you fail to report or pay crypto taxes:
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🔸 Interest under Section 234A/B/C may apply
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🔸 Penalty for under-reporting can be 50% of tax evaded
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🔸 Prosecution for intentional tax evasion
🌎 Crypto Tax vs Stock Market Tax – A Quick Comparison
| Feature | Crypto | Stock Market |
|---|---|---|
| Tax Rate | Flat 30% | 15% (STCG), 10% (LTCG) |
| Loss Set-off | Not Allowed | ✅ Allowed |
| TDS | 1% (Above ₹10,000) | ✅ Only in special cases |
| Deductions | Only cost of acquisition | Transaction costs, STT allowed |
📱 How to Track Your Crypto Tax?
Use digital tools that sync with Indian exchanges:
They offer ready-to-use tax reports for filing.
🔚 Conclusion
Crypto taxation in India is now very real — and ignoring it can land you in trouble. The 30% flat tax and 1% TDS system are designed to bring transparency and accountability to the booming crypto sector.
If you’re investing or trading crypto in 2025, stay informed, use tax tools, and report honestly. Smart tax planning is just as important as smart investing.
