If you’re curious about crypto tax in India, you’re not alone. With so many people getting into digital assets, questions like “Is crypto taxable in India?” are more common than ever. The short answer? Yes, it is! Understanding Indian cryptocurrency taxes is now a must if you want to stay on the right side of the law.
In this guide, we’ll walk you through how to pay crypto taxes in India, covering the basics of reporting your crypto gains and losses. So, let’s dive into what you need to know about crypto tax India.
Key Takeaways:
- India taxes crypto profits at a flat 30% rate, and losses cannot offset this, meaning each profit is fully taxable without deductions.
- A 1% TDS is deducted on crypto trades exceeding ₹50,000 yearly (₹10,000 for smaller investors).
- The deadline for filing Income Tax Returns (ITR) on crypto gains for the financial year is July 31; missed deadlines allow for delayed filing by December 31 but with potential penalties.
What are Cryptocurrencies?
Cryptocurrencies are digital money that works without being controlled by any government or bank. They use blockchain technology to check and record transactions.
Bitcoin is the most popular cryptocurrency, but there are thousands of others, each with different features and uses.
Is Crypto Taxed in India?
Yes, crypto is taxed in India. The government started taxing crypto income from the Union Budget of 2022. The tax rate on gains from crypto is set high, at 30%. Any income you make from selling or transferring crypto is taxed this way. Unlike other assets, you cannot reduce your crypto income with any deductions or set losses against it. This means if you make a profit on crypto, you will pay full tax on it.
Also, a 1% TDS (Tax Deducted at Source) is applied on each crypto transaction that crosses ₹50,000 in a year for regular investors, or ₹10,000 for individual investors. This 1% TDS is meant to help the government track crypto trades easily.
How Crypto Taxation Works in India?
Tax on crypto in India is straightforward but strict. Any time you make a profit by selling, transferring, or exchanging your crypto, you pay a 30% tax on the profit.
Suppose you bought a digital asset for ₹100,000 and sold it later for ₹150,000; the ₹50,000 gain is taxed at 30%, so ₹15,000 goes to taxes. You can’t deduct the cost of any other expenses, only the purchase price of the crypto.
The 1% TDS rule on each transaction above ₹50,000 or ₹10,000 means that crypto exchanges or buyers must withhold this amount and report it. So, if you trade frequently, the TDS amount can add up quickly, impacting the cash you hold. However, you can use the TDS already paid to reduce your final tax.