Crypto tax rules in India
| Rule | Detail |
|---|---|
| Tax rate | 30% flat + 4% cess (surcharge if applicable) |
| Deductions | Only cost of acquisition — no fees, mining or other expenses |
| Losses | Can't be set off against any income, even other VDA gains, or carried forward |
| TDS | 1% under Section 194S above ₹50,000 a year (₹10,000 for others) |
| Gifts | VDA received as a gift is taxable if over ₹50,000 (non-relatives) |
| Reporting | Schedule VDA in ITR-2 or ITR-3 |
What counts as a transfer
- Selling crypto for rupees
- Swapping one crypto for another
- Using crypto to pay for goods or services
- Each trade is computed separately — gains and losses aren't netted
Common mistakes
Netting losses against gains is the most common error and leads to a demand. The second is ignoring foreign exchanges — TDS isn't deducted there, but the income is still taxable and the holdings may need reporting as foreign assets.
Worked example: two trades in a year
- 1Trade A: bought Bitcoin for ₹2,00,000, sold for ₹3,00,000 — gain ₹1,00,000.
- 2Trade B: bought Ethereum for ₹1,50,000, sold for ₹1,00,000 — loss ₹50,000.
- 3The loss on Trade B can't be set off, so taxable VDA income is ₹1,00,000.
- 4Tax at 30% = ₹30,000, plus 4% cess = ₹1,200.
Tax ≈ ₹31,200, even though the net profit was only ₹50,000.
