Crypto Tax Rules in India: 30% Tax & 1% TDS Explained
Since the Finance Act 2022, India taxes cryptocurrency and other crypto-assets under a dedicated category called Virtual Digital Assets (VDAs). The rules are stricter than for most other asset classes, and understanding them matters before you trade or invest.
The 30% flat tax on gains
Profits from transferring (selling, swapping, or spending) a VDA are taxed at a flat 30%, regardless of your income slab — plus applicable surcharge and a 4% cess. Crucially, you can only deduct the cost of acquiring the asset; no other expenses (like transaction fees in most interpretations, or unrelated business costs) can be deducted against this gain.
No loss set-off
Losses from one VDA cannot be set off against gains from another VDA, and cannot be carried forward to future years the way capital losses on stocks typically can. A loss on one coin does not reduce your taxable gain on a profitable trade in a different coin within the same year.
The 1% TDS rule (Section 194S)
Beyond the 30% tax on profit, a 1% Tax Deducted at Source applies to the transaction value itself when VDAs are transferred above specified thresholds, deducted by the exchange or the paying party and deposited with the government — this is separate from, and in addition to, the 30% tax on any actual gain.
Gifts and other transfers
Receiving a VDA as a gift is generally taxable in the recipient’s hands, with some exemptions (such as gifts from specified relatives) similar to other gift-tax rules.
This is general information, not tax advice
Tax rules can change with each Finance Act and interpretations continue to evolve. This page explains the framework as generally understood, not your specific liability — always confirm current rules and your own situation with a qualified chartered accountant before filing.
Not investment advice
This page is general information for education only, not investment, legal, or tax advice. Rules and risks can change — do your own research and consult a qualified professional before acting on anything here.