Crypto Tax in India

Crypto tax in India became explicitly defined in the Union Budget 2022, effective from April 1, 2022. All Virtual Digital Assets (VDAs), including cryptocurrencies and NFTs, are taxed at a flat rate of 30% on gains, with no deductions allowed except the cost of acquisition. A 1% TDS applies on transactions above specified thresholds.

Key Crypto Tax Rules in India

**Tax rate on gains: 30% flat**

– All profits from selling, swapping, or spending crypto are taxed at 30%
– No benefit of lower tax slabs, no deduction for losses, no deduction for trading fees
– Holding period does not matter; short-term and long-term gains are both taxed at 30%

**Losses cannot be offset**

– Losses in crypto cannot be set off against gains from other crypto or any other income
– Losses cannot be carried forward to future years

**1% TDS**

– 1% TDS is deducted at source on transactions above Rs 50,000 per year (Rs 10,000 for certain specified persons)
– Exchange-to-exchange and wallet-to-wallet transfers may also attract TDS in certain interpretations
– TDS is creditable against final tax liability

**Gifts received in crypto**

– Crypto received as a gift is taxable as income in the hands of the receiver, except from specified relatives

What Counts as a Taxable Event?

– Selling crypto for INR
– Swapping one crypto for another
– Spending crypto to buy goods or services
– Receiving crypto as income (staking rewards, mining, airdrops)

Reporting

Crypto gains must be reported in the income tax return under the VDA schedule, irrespective of the amount.

Practical Example

Vivek bought 1 BTC at Rs 20 lakh in 2021 and sold it at Rs 30 lakh in 2023, a gain of Rs 10 lakh. Tax = Rs 10 lakh x 30% = Rs 3 lakh. During the year, he also lost Rs 2 lakh on altcoin trades. The altcoin loss cannot be offset against his BTC gain. His total tax liability is Rs 3 lakh.

Key Takeaways

– Crypto gains in India are taxed at a flat 30% rate under the VDA framework (no slab benefit)
– No deduction for losses, trading fees, or other expenses except cost of acquisition
– Crypto losses cannot be set off against other income or crypto gains; no carry-forward allowed
– 1% TDS applies on qualifying transactions on recognised exchanges
– All taxable events (selling, swapping, spending) must be reported in the income tax return