How Much Tax Do You Pay on Crypto in India? A 2025 Guide to Digital Asset Taxation

If you’re trading cryptocurrencies in India, understanding your tax obligations is non-negotiable. Unlike traditional investments, India’s approach to crypto taxation is stringent and specific. The good news? The rules are now clearly defined. From the moment you generate gains through trading, mining, or staking, you need to know exactly how much tax you’ll owe. Let’s break down India’s crypto tax landscape with precision and clarity.

Quick Overview: Your Crypto Tax Rates at a Glance

The Indian government established a flat-rate taxation system for virtual digital assets (VDAs) starting April 1, 2022. Here’s what you need to know immediately:

• Standard tax rate on all crypto gains: 30%
• Additional surcharge: 4% cess
• Tax Deducted at Source (TDS): 1% on all transactions
• Losses cannot be offset against other income

This means if you profit ₹1,00,000 from trading, you’ll pay ₹34,000 in combined taxes (30% + 4% cess). No deductions allowed. No exceptions.

What Is India’s Virtual Digital Asset (VDA) Framework?

The term “Virtual Digital Asset” might sound intimidating, but it simply refers to any digital asset with cryptographic or blockchain backing. India’s Finance Bill 2022 formally recognized VDAs in its tax code, and Section 115BBH of the Income Tax Act now governs how these assets are taxed.

What Counts as a Virtual Digital Asset?

• Cryptocurrencies: Bitcoin, Ethereum, and thousands of altcoins
• Non-Fungible Tokens (NFTs): Unique digital collectibles and art
• Staking rewards, mining output, and airdropped tokens

Key Difference: VDAs vs. Traditional Investments

Traditional assets like stocks or real estate are governed by established financial institutions and clear ownership records. VDAs operate differently—they’re decentralized, peer-to-peer, and exist purely in digital form. This fundamental difference shaped how the Indian government decided to tax them: uniformly, heavily, and without allowance for detailed deductions.

The 30% Tax Rate Explained: How Much Tax on Crypto in India

Here’s the critical part: any gain you make from transferring or selling a VDA is taxed at a flat 30% rate, plus 4% cess. This applies universally, regardless of how much you earned or which tax bracket you’d normally fall into.

Why Is This Different from Capital Gains Tax?

Traditional capital gains follow your income tax slab. Earn ₹10 lakhs and pay 20-30% depending on the bracket. With crypto, there’s no sliding scale. Whether you earned ₹1,000 or ₹10 crores, the rate remains 30%.

Additionally, under Section 115BBH, no expense deductions are allowed except for the cost of acquisition. This means transaction fees, trading losses, or investment expenses can’t reduce your taxable gains.

Breaking Down Tax Across Different Crypto Activities

Trading Cryptocurrencies: 30% Tax on Profits

When you buy Bitcoin at ₹30,00,000 and sell it at ₹40,00,000, you’ve made a ₹10,00,000 gain. Your tax calculation is straightforward:

Gain calculation:

• Selling price: ₹40,00,000
• Purchase price: ₹30,00,000
• Profit: ₹10,00,000

Tax calculation:

• Tax: ₹10,00,000 × 30% = ₹3,00,000
• Cess: ₹3,00,000 × 4% = ₹12,000
• Total tax liability: ₹3,12,000

Every trade—whether from Bitcoin to Ethereum or to stablecoins—triggers a taxable event.

Mining Crypto: Income Tax at 30% Plus Additional Capital Gains

Mining is taxed in two stages. First, when you receive mined crypto, its fair market value at that moment becomes taxable income. Second, if you later sell it for a higher or lower price, that creates a separate capital gain or loss.

Example: You mine Bitcoin valued at ₹2,00,000 on receipt.

• Step 1 - Tax on mining income:

  • Taxable income: ₹2,00,000 × 30% = ₹60,000
  • Cess: ₹60,000 × 4% = ₹2,400
  • Subtotal: ₹62,400

• Step 2 - If you sell later for ₹3,00,000:

  • Capital gain: ₹3,00,000 - ₹2,00,000 = ₹1,00,000
  • Tax on capital gain: ₹1,00,000 × 30% = ₹30,000
  • Cess: ₹1,200
  • Subtotal: ₹31,200

• Total tax: ₹93,600

Note: If the value drops and you sell for ₹1,50,000, you report a loss of ₹50,000—but this loss cannot offset other income types or be carried forward to future years.

Staking and Minting Rewards: 30% on Fair Market Value

When you earn rewards through staking (like on Ethereum or other PoS networks), the entire amount is taxable at fair market value on the day of receipt.

Example: You earn ₹1,00,000 worth of crypto through staking.

• Taxable income: ₹1,00,000
• Tax: ₹1,00,000 × 30% = ₹30,000
• Cess: ₹30,000 × 4% = ₹1,200
• Total: ₹31,200

Receiving Crypto as Gifts or Airdrops: Conditional Tax

This is where it gets nuanced. Gifts and airdrops are taxed only if they exceed certain thresholds:

• Gifts from relatives: Tax-free up to ₹50,000
• Gifts from non-relatives or airdrops: Taxable if value exceeds ₹50,000

Example: You receive an airdrop worth ₹60,000.

• Taxable income: ₹60,000 (exceeds ₹50,000 threshold)
• Tax: ₹60,000 × 30% = ₹18,000
• Cess: ₹720
• Total: ₹18,720

Crypto-to-Crypto Trades: Each One Is Taxable

Don’t assume swapping Bitcoin for Ethereum without converting to rupees means no tax. Wrong. Every crypto-to-crypto trade is a taxable event based on the fair market value at the moment of exchange.

If you swap ₹5,00,000 worth of Bitcoin for ₹7,00,000 of Ethereum:

• Capital gain: ₹2,00,000
• Tax due: ₹60,000 + ₹2,400 cess

Understanding the 1% Tax Deducted at Source (TDS)

Starting July 1, 2022, Section 194S mandated that 1% TDS be deducted from all VDA transfers. When you trade on centralized exchanges like Gate.io, the platform automatically deducts this. On peer-to-peer platforms, the buyer is responsible.

How TDS Works in Practice

If you sell Bitcoin worth 19,000 USDT on Gate.io:

• TDS deducted: 190 USDT
• Amount received: 18,810 USDT
• TDS is deposited to the government against your PAN

Managing and Claiming TDS Credits

When filing your annual return, the TDS deducted throughout the year is credited against your total tax liability. If TDS exceeds your actual tax due, you receive a refund. If it falls short, you pay the difference.

Critical: Maintain complete transaction records including TDS deduction amounts. These are your proof when filing returns.

Step-by-Step: How to Calculate Your Crypto Tax

Step 1: Categorize Each Transaction

Identify whether each transaction is a trade, mining activity, staking reward, gift, or airdrop. Each category has specific tax rules.

Step 2: Determine Acquisition Cost

Track exactly what you paid to acquire each asset. This is your cost basis—the only expense you can deduct.

Step 3: Calculate Gain or Loss

• For trades and sales: Selling price - Acquisition cost = Gain/Loss
• For mining/staking: Fair market value at receipt - ₹0 = Taxable income
• For gifts/airdrops: Fair market value at receipt = Taxable income (if above threshold)

Step 4: Apply the 30% Rate Plus Cess

Multiply your gain by 0.30, then multiply that result by 1.04 (to include 4% cess). The result is your total tax liability for that transaction.

Step 5: Aggregate and File

Sum all taxable events for the financial year and report the total on your income tax return using Schedule VDA.

How to Accurately Report Crypto on Your Tax Return

Filing Process

1. Log into the Income Tax Department’s e-filing portal at incometax.gov.in
2. Select the appropriate ITR form:
   • Use ITR-2 if you have only capital gains
   • Use ITR-3 if you conduct crypto trading as a business
3. Complete Schedule VDA with:
   • Date of acquisition and transfer
   • Cost of acquisition
   • Sale consideration
   • Fair market value at transaction
4. Cross-verify all details for accuracy
5. Submit before the July 31 deadline to avoid penalties

Documentation You’ll Need

• Exchange statements showing all transactions
• TDS deduction certificates (Form 16A)
• Bank statements linking deposits and withdrawals
• Mining pool payouts (if applicable)
• Fair market value records (use closing price on transaction date)

Tax Planning Strategies to Optimize Your Liability

Strategic Accounting Methods

Use FIFO (First-In-First-Out) to systematically calculate gains. This method assumes you sell the oldest holdings first, which can minimize gains when prices were lower initially.

Timing Purchases and Sales

Execute large sales in years when your other income is lower, potentially keeping you in a lower tax bracket for non-crypto income (though crypto gains remain flat at 30%).

Harvesting Losses

If your holdings decline, realize those losses to offset other capital gains from crypto. However, remember that crypto losses cannot offset salary income or other types of income—only other capital gains from crypto or other assets.

Diversification Strategy

Holding stablecoins alongside volatile assets can reduce overall portfolio volatility and make tax planning more predictable.

Critical Mistakes to Avoid When Filing

1. Incomplete Transaction Reporting

Report every single trade, transfer, mining event, and airdrop. The tax department cross-references exchange records and TDS filings. Omissions invite severe penalties.

2. Confusing TDS Obligations

Remember: TDS at 1% is deducted on all transactions over ₹50,000 (for individuals) on centralized exchanges. On P2P platforms, the buyer must deduct it. Mishandling this can lead to duplicate taxation.

3. Incorrect Cost Basis Tracking

Never guess or average your acquisition prices. Every coin has a specific purchase price. Tracking errors compound across your portfolio and lead to audit triggers.

4. Ignoring Crypto-to-Crypto Trades

Each swap is taxable. Calculate the fair market value in rupees at the moment of exchange using real-time prices.

5. Failing to Claim TDS Credits

Don’t leave money on the table. If TDS has been deducted, claim it as a credit. This could substantially reduce your final tax bill or generate a refund.

The Evolving Landscape: What’s Next for Crypto Taxation in India?

As of 2025-2026, India’s crypto tax framework remains largely stable with the 30% flat rate and 1% TDS as the cornerstones. However, the regulatory environment continues to evolve. The government has signaled interest in more detailed transaction tracking and potential amendments to loss offset rules.

Recommendation: Consult with a tax professional specializing in digital assets annually. Regulations can shift, and individual circumstances vary. Professional guidance is not optional—it’s essential for compliance and optimization.

Wrapping Up: Your Action Items

Understanding exactly how much tax you pay on crypto in India requires attention to detail:

• All gains are taxed at a flat 30% plus 4% cess
• Mining, staking, and trading each have specific calculation methods
• TDS of 1% is automatically handled on platforms like Gate.io
• Losses cannot reduce other income types
• Accurate documentation is non-negotiable for compliance

Stay informed, maintain meticulous records, and consider professional tax guidance to navigate India’s crypto taxation landscape effectively. The complexity is real, but the stakes—avoiding penalties and optimizing your position—justify the effort.