Is Crypto Taxed in India? 💸
- Yes, Virtual Digital Assets (VDAs), including cryptocurrencies like Bitcoin and Ethereum, as well as NFTs, became taxable in India after the Union Budget 2022.
- The government officially classified them under VDAs, covering cryptos, DeFi, and NFTs—essentially, all non-physical digital assets.
Tax Rates on Crypto Gains 📈
- Flat 30% tax is levied on profits from the sale or transfer of VDAs.
- This rate applies uniformly, regardless of how long you’ve held the asset.
No Deduction Allowed 💰
- Only the cost of acquisition is allowed as a deduction.
- No deductions for transaction fees, blockchain gas fees, or interest on borrowed money.
Restriction on Set-Off and Carry Forward of Losses
- Crypto losses cannot be set off against any other income (including other crypto gains).
- Loss from one VDA cannot offset gains from another.
- No carry forward of crypto losses is allowed.
TDS on Crypto Transactions under Section 194S
| 1% TDS is levied when total crypto transaction value in a year exceeds: | |
| ₹50,000 | For individuals with income > ₹50 lakh or businesses with turnover > ₹1 crore |
| ₹10,000 | For all others |
- In P2P transactions, the buyer must deduct and deposit TDS.
Tax on Other Crypto Activities 💸
- Not just trading—other crypto activities are taxable too:
| Crypto Activity | Tax Treatment |
|---|---|
| Buying & Holding | No tax until sold |
| Trading | 30% on profits |
| Mining Rewards | Taxed as business income |
| Staking Rewards | Income from other sources |
| Airdrops | Income from other sources |
| NFT Sales | 30% tax + 1% TDS if thresholds met |
Tax Filing & Reporting Requirements for Crypto Investors 📂
- How to Report Crypto Income:
- Report under ‘Capital Gains’ for trading or under ‘Other Sources’ for mining/staking.
- Penalties for Non-Compliance:
| Non-compliance | Penalty |
|---|---|
| Delayed Filing | ₹5,000 (₹1,000 if income < ₹5L) |
| Interest on Late Tax | 1% per month (Section 234A) |
| TDS Not Deducted | Equal to the TDS amount |
| Interest on Undeducted TDS | 1% per month |
| Interest on Undeposited TDS | 1.5% per month |
| Income Concealment | 50% to 200% of tax evaded (Sec 270A) |
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