Crypto Tax in India 2025: Complete Guide to Rules, TDS, GST & Savings

Introduction

India now taxes income from the transfer of Virtual Digital Assets (VDAs)—like crypto and NFTs—at a flat 30% under Section 115BBH of the Income-tax Act. Only the cost of acquisition is deductible, and losses can’t be set off against other income. Income Tax IndiaIncome Tax Department

On top of this, most transactions attract 1% TDS under Section 194S, typically deducted by exchanges at the time of transfer. KPMG India

Exchanges also charge 18% GST on their trading/service fees (not on your capital gains), which further increases the effective cost of frequent trading. CoinDCXPress Information Bureau

For compliance, taxpayers must disclose crypto activity in the “Schedule VDA” section of ITR-2/ITR-3 and report it transaction-wise. Income Tax Department+1

🔑 Key Crypto Tax Rules in India (2025)

Before you start trading or investing, here are the most important tax rules every Indian crypto trader must know:

• 💰 30% Flat Tax – Any profit from selling crypto is taxed at 30%, no matter your income level.
• ✂️ 1% TDS (Tax Deducted at Source) – On every crypto trade above ₹10,000, the exchange deducts 1% TDS.
• 🧾 No Deduction Allowed – You can’t deduct expenses (like electricity, internet, or trading fees) from your profits.
• 📉 Losses Can’t Be Set Off – Losses from crypto trading cannot be adjusted against profits from other investments.
• 🛒 GST on Services – If you run a business providing crypto-related services (like exchanges, wallets, or consulting), 18% GST may apply.

🏛️ Crypto Tax Laws in India: The Basics

Since April 2022, the Indian government officially introduced crypto taxation rules under the Income Tax Act. Here’s what you need to know:

1. Flat 30% Tax on Profits 💰
   • Any profit from selling crypto is taxed at 30% (plus surcharge & cess).
   • No deductions are allowed (like electricity cost, internet, etc.).
2. 1% TDS (Tax Deducted at Source) 📉
   • On every trade above ₹10,000 (₹50,000 yearly for certain cases), 1% TDS is deducted.
   • This applies on both buy & sell transactions on Indian exchanges.
3. No Offset of Losses 🚫
   • If you make a loss in one coin (say Bitcoin), you cannot adjust it against profit in another coin (say Ethereum).
4. Gifts are Taxable 🎁
   • If you receive crypto as a gift, it is also considered taxable income (unless received from family).

📊 How to Calculate Your Crypto Taxes

To stay compliant, you need to calculate your gains, TDS, and final tax liability correctly. Here’s the step-by-step approach:

1. Track All Transactions 📝
   • Maintain a record of every trade: buy price, sell price, date, exchange used.
   • Example: Bought Bitcoin at ₹20,00,000 → Sold at ₹24,00,000.
2. Calculate Profit or Loss 💰
   • Formula: Selling Price – Purchase Price
   • Example: ₹24,00,000 – ₹20,00,000 = ₹4,00,000 profit.
3. Apply 30% Flat Tax 🏦
   • Profit ₹4,00,000 × 30% = ₹1,20,000 (plus cess).
4. Deduct TDS Already Paid 📉
   • If the exchange already deducted 1% TDS, subtract it from your final liability.
   • Example: On ₹24,00,000 sale → ₹24,000 TDS already deducted.
   • Final payable = ₹1,20,000 – ₹24,000 = ₹96,000.
5. Report in ITR (Income Tax Return) 🧾
   • Use the Schedule VDA section in ITR forms (from FY 2022–23 onwards).
   • Mention all trades, profits, losses, and TDS deducted.

🛠️ Best Tools & Platforms to Calculate Crypto Taxes

Manually tracking every trade is tough, especially if you use multiple exchanges. Luckily, several reliable tools can help:

1. Koinly 🌍
   • Global crypto tax calculator.
   • Automatically syncs with major exchanges & wallets.
   • Generates India-compliant tax reports.
2. Zerion 📱
   • Good for portfolio tracking.
   • Helps you track gains/losses but needs manual input for tax filing.
3. Quicko (India-based) 🇮🇳
   • Focused on Indian tax rules.
   • Direct integration with Indian exchanges like CoinDCX, WazirX, and Dhan.
   • Provides ITR-ready reports.
4. ClearTax Crypto 💻
   • Popular in India.
   • Auto-import trades and directly generate Schedule VDA reports for ITR.

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💡 Pro Tip: If you’re trading actively, always export your transaction history at the end of each month 📅. This avoids year-end chaos and mistakes.

⚠️ Common Mistakes to Avoid While Filing Crypto Taxes

Even experienced traders make errors that can lead to notices from the IT department 🚨. Avoid these pitfalls:

1. Ignoring Small Transactions 💸
   • Even if you earn ₹500 profit, it is taxable.
   • Many traders skip small trades thinking they don’t matter.
2. Not Reporting Airdrops & Rewards 🎁
   • Free tokens from airdrops, staking rewards, or referral bonuses are also taxable.
3. Mixing Personal & Business Trading 📊
   • If you trade as a business (high frequency, large capital), your tax treatment differs.
   • Mixing both may cause incorrect filings.
4. Only Reporting Net Profit 📉
   • Some traders report only their final profit/loss.
   • The law requires you to declare every trade (buy/sell).
5. Missing the 1% TDS Rule ✂️
   • Exchanges already deduct 1% TDS on trades above ₹10,000.
   • But you must still report it in ITR to claim credit later.

📝 Step-by-Step Guide to Filing Your Crypto Taxes in India

Follow these steps carefully to stay 100% compliant ✅:

1. Collect All Trade Records 📑
   • Download your complete trade history from all exchanges (Binance, CoinDCX, WazirX, Dhan, etc.).
   • Include buy, sell, deposits, withdrawals, and transfer history.
2. Calculate Gains & Losses 📊
   • Check your buy price vs sell price for every trade.
   • Profit = Taxable @30% (flat).
   • Loss = Can’t be adjusted against other income in India (as per Income Tax rules).
3. Separate Income Types 🧾
   • Trading profit = Taxed @30%.
   • Mining/Staking rewards = Counted as Income from Other Sources and also taxed @30%.
   • Airdrops & Gifts = Also taxable.
4. Deduct TDS (if any) ✂️
   • Indian exchanges deduct 1% TDS on every crypto transaction above ₹10,000.
   • You can claim this TDS while filing ITR.
5. Report in ITR 🖥️
   • Go to Income Tax e-filing portal.
   • Use ITR-2 form if you are salaried + trading.
   • Use ITR-3 form if you are a professional/business + trading.
   • Report all crypto trades under “Income from Virtual Digital Assets (VDA)”.
6. Pay 30% Tax + Cess 💰
   • Final liability = 30% tax on profit + 4% health & education cess.
   • Example: ₹1,00,000 profit → ₹30,000 tax + ₹1,200 cess = ₹31,200 total tax.
7. File Before Deadline ⏳
   • Usual deadline: July 31 every year (for previous financial year).
   • Late filing = Penalty up to ₹5,000.

💡 Tips to Reduce Your Tax Burden (Legally)

1. Use Indian Exchanges with TDS 🇮🇳
   • Helps you track and claim TDS while filing ITR.
2. Hold Long-Term Instead of Short-Term ⏳
   • Fewer trades = fewer taxable events.
3. Gift to Family in Lower Tax Slabs 🎁
   • Gifting crypto to family members (within limits) may reduce overall tax liability.
4. Use International Exchanges Carefully 🌍
   • You must still report them in ITR. Not reporting = penalty.
5. Maintain Proper Records 🗂️
   • Keep screenshots, statements, and wallets proof for at least 6 years in case of audit.

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✅ Final Note:
Crypto taxation in India is still evolving 🚀. Always double-check the latest CBDT/Income Tax Department guidelines or consult a CA familiar with crypto before filing.