Crypto Tax in India: What You Need to Know
Quick Summary
India taxes cryptocurrency gains at a flat 30% rate under Section 115BBH of the Income Tax Act, introduced in the 2022 Union Budget. Additionally, 1% Tax Deducted at Source (TDS) applies to crypto transactions exceeding specified thresholds under Section 194S. Crypto losses cannot be offset against gains. These rules apply whether you use Indian exchanges (like WazirX, CoinDCX) or international exchanges (like Binance, OKX, Gate.io).
30% Flat Tax on Crypto Gains (Section 115BBH)
The key points of India's crypto tax regime:
- Rate: 30% flat tax on all income from transfer of virtual digital assets (VDAs), including cryptocurrencies, NFTs and similar digital assets.
- No distinction: There is no distinction between short-term and long-term capital gains for crypto — the 30% rate applies regardless of how long you held the asset.
- No deductions: Only the cost of acquisition is deductible. No other expenses (trading fees, internet, equipment) can be deducted.
- No loss offset: Losses from one crypto asset cannot be offset against gains from another crypto asset. Losses from crypto cannot offset gains from other income sources.
- No carry forward: Crypto losses cannot be carried forward to future tax years.
Example: How 30% Crypto Tax Works
Scenario: You buy 1 ETH for ₹2,00,000 and later sell it for ₹3,00,000.
- Capital gain: ₹1,00,000 (₹3,00,000 - ₹2,00,000)
- Tax at 30%: ₹30,000
- Your net gain after tax: ₹70,000
If you had a ₹50,000 loss on BTC in the same year:
- You cannot offset the ₹50,000 BTC loss against the ₹1,00,000 ETH gain
- You still owe ₹30,000 tax on the ETH gain
- The BTC loss is effectively wasted — it cannot reduce your tax
1% TDS on Crypto Transactions (Section 194S)
From July 1, 2022, a 1% Tax Deducted at Source (TDS) applies to the transfer of crypto assets:
- Rate: 1% of the transaction value
- Threshold: TDS applies when the aggregate value of transactions exceeds ₹50,000 in a financial year (₹10,000 in certain cases for specified persons)
- Who deducts: The exchange/platform facilitating the transaction, or the buyer in P2P transactions
- How it works: When you sell crypto on an Indian exchange, the exchange deducts 1% TDS and deposits it to the government on your behalf. The TDS is reflected in your Form 26AS and can be claimed as credit when filing your income tax return.
- International exchanges: Exchanges like Binance, OKX and Gate.io may not deduct TDS on P2P transactions — Indian users are responsible for compliance.
Tax Applicability: Indian vs International Exchanges
| Aspect | Indian Exchanges | International Exchanges |
|---|---|---|
| 30% Tax on Gains | Yes | Yes |
| 1% TDS Deduction | Yes (exchange handles) | May not deduct — user responsible |
| Form 26AS entry | Automatic | User must self-report |
| KYC Required | Yes | Yes (for FIU-registered exchanges) |
| Tax Liability | Same | Same — applies regardless of exchange location |
Practical Tips for Indian Crypto Users
- Maintain detailed records: Track every transaction — buy price, sell price, date, exchange, fees and counterparty. This is essential for accurate tax reporting.
- Don't assume international exchanges avoid tax: Indian tax law applies to Indian residents regardless of where the exchange is located. Using Binance does not exempt you from Indian crypto tax.
- Budget for 30% tax: If you make a profit, set aside 30% for tax immediately. Many traders get caught out spending gains and then struggling to pay the tax bill.
- Check your Form 26AS: If using Indian exchanges, verify that TDS deductions appear correctly in your Form 26AS before filing your return.
- Consult a tax professional: Crypto tax in India is complex and evolving. A qualified CA or tax professional familiar with crypto taxation can help ensure compliance and optimize your tax position.
Important: This page provides educational information about crypto taxation in India. Tax laws are subject to change and interpretation. This is not tax advice. Indian crypto users should consult a qualified Chartered Accountant or tax professional for advice specific to their situation. Penalties for non-compliance with Indian tax laws can be significant.