Crypto Tax India: Latest Rules Every Investor Must Know

Cryptocurrency investing has grown rapidly in India. From first-time investors experimenting with small amounts to experienced traders actively buying and selling digital assets, crypto has found a place in many portfolios. But while investing feels exciting, understanding taxes is equally important. Ignoring tax rules can lead to penalties, notices, or unnecessary stress later.

This guide breaks down crypto tax India rules in a clear and easy way, so you know exactly where you stand and how to stay compliant.

Is Cryptocurrency Legal and Taxable in India?

In India, cryptocurrencies are not considered legal tender, but they are allowed to be traded and held. The government classifies them as Virtual Digital Assets (VDAs). This classification brings crypto transactions under the tax net.

Simply put, if you earn income from crypto—whether through trading, investing, or other means—it is taxable. The tax department treats crypto income separately from regular income, like salary or business profits.

How Is Crypto Income Taxed in India?

The government introduced specific tax rules for crypto in 2022, and these rules still apply today.

Flat 30% Tax on Profits

Any profit made from selling, swapping, or transferring cryptocurrency is taxed at a flat 30% rate. This applies regardless of your income slab.

For example:

• If you buy crypto for ₹50,000 and sell it for ₹80,000
• Your profit is ₹30,000
• Tax payable = 30% of ₹30,000 (plus applicable surcharge and cess)

This rate applies equally to short-term and long-term gains.

No Set-Off or Carry Forward of Losses

One of the most important rules investors must understand is that crypto losses cannot be adjusted.

This means:

• You cannot offset crypto losses against crypto gains
• You cannot offset crypto losses against salary or business income
• You cannot carry forward crypto losses to future years

Even if you lose money in one trade and gain in another, tax is calculated on each profitable transaction separately.

1% TDS on Crypto Transactions

Apart from income tax, a 1% Tax Deducted at Source (TDS) applies to most crypto transactions.

When Is TDS Applicable?

• When you sell crypto
• When crypto is exchanged for another crypto
• When crypto is transferred for consideration

The buyer usually deducts 1% TDS before making the payment. While this TDS is not an extra tax (it can be adjusted later), it affects cash flow and transaction planning.

Taxation on Different Types of Crypto Income

Crypto income is not limited to trading alone. Here’s how different crypto activities are taxed:

Crypto Trading and Investing

Profits from buying and selling crypto are taxed at 30%, with 1% TDS applicable on transfers.

Crypto Mining

Income from mining is taxable. The full value of mined crypto at the time of receipt is treated as income. Expenses like electricity or hardware costs are not allowed as deductions.

Crypto Gifts

If you receive crypto as a gift:

• It is taxable in the hands of the receiver
• Tax is calculated based on the fair market value
• Gifts from specified relatives may be exempt, subject to conditions

Airdrops and Rewards

Airdrops, staking rewards, and referral incentives are also taxable. They are treated as income when received and taxed accordingly.

How to Report Crypto in Your Income Tax Return?

Crypto income must be reported correctly while filing your income tax return (ITR).

• Profits from crypto transactions are reported under a separate VDA category
• Each transaction should be recorded with the purchase price, the sale price, and the date
• TDS details must be matched with Form 26AS

Maintaining proper records is essential, especially if you have multiple transactions throughout the year.

What Happens If You Don’t Pay Crypto Tax?

Not reporting crypto income or underreporting profits can attract serious consequences:

• Income tax notices
• Interest on unpaid tax
• Penalties for concealment of income
• Scrutiny of past transactions

With increasing data-sharing and reporting mechanisms, the tax department can track crypto activity more effectively than before.

Key Things Crypto Investors Should Keep in Mind

Here are a few practical tips to stay stress-free:

• Maintain a transaction log for every buy and sell
• Account for 1% TDS while planning trades
• Avoid frequent trading without understanding the tax impact
• File returns on time with accurate disclosures
• Seek professional advice if transactions are complex

Understanding the tax on crypto in India helps investors make better financial decisions rather than reacting after a tax notice arrives.

Final Thoughts

Crypto investing in India is no longer just about market timing or price predictions. Tax compliance plays a crucial role in long-term wealth planning. The rules may seem strict, but once you understand them, managing your crypto taxes becomes much simpler.

By staying informed, keeping records, and filing returns correctly, investors can enjoy the benefits of crypto without legal or financial complications. Whether you are a beginner or an active trader, knowing the latest tax rules ensures you stay on the right side of the law—peacefully and confidently.