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Streamline vendor management and collaboration in one unified portal
Optimise ITC for profitability
Bulk invoicing within any ERP
e-TDS return filing solution
Maximise EBITDA with early vendor payments
Instant working capital financing
Automated secretarial compliance
Connected finance ecosystem for process automation, greater control, higher savings and productivity
GST and direct tax compliance
Complete supply chain solution for ultimate control, effortless collaboration, and assured compliance
File ITR in 3 minutes
For Personal Tax and business compliances
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Updated on: Apr 8th, 2025
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10 min read
Cryptocurrencies are emerging as prominent financial innovation, offering decentralised and borderless transactions. In India virtual digital assets (VDAs) such as cryptocurrencies, NFTs, etc. are now subject to taxation, whose capital gains are taxable at a flat 30%. Also, TDS is deducted at 1% of sale consideration. In this article, we will learn in detail the taxation implications on virtual digital assets.
In layman’s terms, cryptocurrencies are digital currencies designed to buy goods and services, similar to other currencies. However, they have largely been controversial due to their de-centralised nature, meaning their operation without any intermediary like banks, financial institutions, or central authorities.
Today, more than 1,500 virtual currencies, such as Bitcoin, Ethereum, Litecoin, Dogecoin, Ripple, Matic, etc., are traded in the digital currency world. The investment and trading volume of cryptocurrencies has increased multifold.
In simple words, VDAs mean all types of crypto assets, including NFTs, tokens, and cryptocurrencies, but they will not include gift cards or vouchers.
Yes, gains from cryptocurrency are taxable in India. The government’s official stance on cryptocurrencies and other VDAs was clarified in the 2022 Budget.
Therefore, the gains from trading, selling, or swapping cryptocurrency will be taxed at a flat 30% (plus a 4% surcharge), irrespective of whether the income is treated as capital gains or business income.
In addition to this tax, 1% TDS will also apply on the sale of crypto assets of more than Rs 50,000 (or Rs 10,000 in certain cases).
If you engage in any of the following transactions, you will be required to pay a 30% tax:
Now that you know you’ll have to pay a 30% tax on your profits from crypto, let us see how to calculate the profits.
Gains are nothing but Sale Price – Cost Price.
Crypto Bookkeeping
The computation of tax on crypto, when you have a large amount of transactions in different exchanges and wallets, will be quite complex. Thus one needs to implement crypto bookkeeping software to manage and consolidate all such transactions. This will help you generate reports like capital gain reports, Holding reports etc. It involves the following
Type of Transaction
Person Liable to Deduct TDS
Rate
Other Information
Example
Buying with INR
The buyer
1%
Buyer cuts 1% before paying the seller, and sends that 1% to the government.
Buying Bitcoin using rupees directly.
Through Indian Exchange
The exchange itself
1%
TDS is deducted automatically – seller gets the remaining amount.
Platforms like CoinDCX or WazirX.
Through Foreign Exchange
The buyer
1%
Buyer must manually deduct and file TDS. It’s not handled by the platform.
Buying on Binance, Coinbase, etc.
P2P Transfers
The buyer
1%
Buyer files Form 26QE (if individual) or 26Q (if not). Needs manual effort.
Buying crypto peer-to-peer using INR.
Crypto for Crypto
Both buyer and seller
1% each
Both have to deduct 1% and take care of their own TDS filings.
Buying ETH using USDT or other stablecoins.
Non-Applicability of 194S TDS on VDA:
Receiving crypto: Airdrops will be taxed on the value determined as per Rule 11UA, i.e. at the fair market value of the tokens as on the date of receipt on exchanges or DEXes. Tax will be levied at normal slab rates.
Sell, swap, or spend them later: If you sell, swap or spend those tokens later, then a 30% tax will be levied on the gains made. The amount which was taxed earlier can be claimed as cost of acquisition.
E.g:
1) Let’s say Mr Bob receives 20,000 ABC tokens as Airdrop on April 01 2022, but these tokens do not trade either on exchanges or DEXs. Then, no tax will be levied.
2) Now, let’s assume Mr Bob receives 20,000 ABC tokens as an Airdrop on April 01, 2022, too, and ABC tokens are traded (exchanging, buying, or selling) on exchanges or DEXes. On April 01, 2022, the ABC token price on the exchange is ₹10.
Receiving crypto: Crypto assets received at the time of mining will be taxed on the value determined as per Rule 11UA, i.e. at the fair market value of the tokens as on the date of receipt on exchanges or DEXes. Tax will be levied at 30% on such value.
Sell, swap, or spend them later: If you sell, swap or spend those assets later, a 30% tax will be levied on the gains made.
In general, transferring your coins to a staking pool or wallet does not typically attract taxes. Additionally, moving assets between wallets is often considered tax-exempt.
Cryptos can be gifted either through gift cards, crypto tokens or crypto paper wallets.
You can use ClearTax’s Crypto Tax feature to calculate taxes on cryptocurrencies received as gifts.
Eg: Mr X purchased Rs 60,000 worth of Bitcoins and later sold it for Rs 80,000. He also bought Ethereum worth Rs 40,000 and sold them for Rs 30,000. The exchange charged a trading fee of Rs 1,000. The tax on both these transactions shall be computed as under:
Currency
Buy (in Rs)
Sell (in Rs)
Net Profit or (Loss)
Tax Rate
Tax Amount
Bitcoin
60,000
80,000
20,000
30%
6,000
Ethereum
40,000
30,000
(10,000)
30%
–
Total
6,000
Here, Rs 10,000 loss is not allowed to be offset against the gains of Rs 20,000. The entire Rs 20,000 income is taxed at 30%. Also, the trading fee of Rs 1,000 is not allowed as a deduction.
Transaction
Tax Treatment
Buying crypto
1% Tax Deducted at Source (TDS) by the exchange (excluding international & P2P trades)
Selling crypto
30% tax on any capital gains
Trading crypto for crypto
30% tax on any gains
Holding crypto
Generally tax-free, but subject to capital gains tax upon disposal
Moving crypto between your own wallets
Generally tax-free; ensure proper documentation for audit trails
Airdrops of crypto
Considered as income at your applicable tax rate; 30% tax if later sold
Hard forks
Income Tax at your applicable tax rate upon receipt; 30% tax if later sold
Gifts of crypto
The recipient will be subject to tax at normal rates; exemptions is for gifts from close family
Donating crypto
Only cash donations are tax deductible; any perceived profits may be subject to 30% tax
Mining rewards
Income Tax at your individual tax rate; 30% tax if later sold
Staking rewards
Income Tax at your individual tax rate; 30% tax if later sold
Dates
Events
2013
A circular was released by the RBI which advised investors to exercise caution when considering speculative investments, including cryptocurrencies.
2018
Despite the RBI’s numerous warnings, the Indian crypto markets continued to gather momentum and attracted a record number of users. In order to prevent this trend from taking a huge leap, the RBI released a circular in April 2018, restricting banking facilities to the crypto exchanges.
2020
After a nearly two-year legal battle, the Indian Supreme Court ultimately overturned RBI’s order, ruling that it was unconstitutional to prohibit trading in cryptocurrencies without any regulatory framework in place. This landmark decision played a significant role in igniting the crypto boom of 2020 and marked a crucial turning point for the struggling Indian crypto market.
2022
Union Budget 2022 introduced crypto tax regulations, most important of them being a flat 30% tax on crypto and 1% TDS on sell transactions.
Still unsure about how to calculate taxes on your crypto transactions?
With ClearTax, crypto tax filing becomes effortless. Our platform is integrated with major crypto exchanges, allowing you to automatically import your trading data. Taxes are then calculated for you — quickly and accurately — so you can file with confidence and ease.
In India, gains from cryptocurrency are subject to a 30% tax (along with applicable surcharge and 4% cess) under Section 115BBH.
30% crypto tax will be levied on the income you made from cryptocurrency which can be calculated as:
Sale Price – Cost Price = Income.
For the financial year 2024-25 and assessment year 2025-26, you will need to declare your cryptocurrency taxes using either the ITR-2 form (if reporting as capital gains) or the ITR-3 form (if reporting as business income). The new ITR forms include a specific section ‘Schedule VDA’ for reporting cryptocurrency gains or income.
TDS under section 194S needs to be deducted at 1% on sale consideration. TDS needs to be deducted by the buyer (who pays the consideration).
United Arab Emirates, HongKong, Malaysia, Singapore, Switzerland, Georgia, Cayman Islands, Slovenia, British Virgin Islands, Malta, El Salvador, and Peurto Rico are the countries on which crypto is tax free.
Under Schedule VDA, crypto gains can be reported in your ITR.
Multitasking between pouring myself coffees and poring over the ever-changing tax laws. Here, I've authored 100+ blogs on income tax and simplified complex income tax topics like the intimidating crypto tax rules, old vs new tax regime debate, changes in debt funds taxation, budget analysis and more. Some combinations I like- tax and content, finance & startups, technology & psychology, fitness & neuroscience. Read more
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Taxation On Cryptocurrency: Guide To Crypto Taxes In India 2025 – ClearTax
