Crypto Tax Rates in India

India is globally recognised as a powerhouse of growth, not just in population but in technology, entrepreneurship, and remote-work talent. 

With a vibrant ecosystem of developers, startups, and outsourcing firms, primarily concentrated in hubs like Bengaluru, this tech base attracts and generates large flows of income, many of which are remittances or digital payments from abroad, and increasingly facilitated by cryptocurrencies.

In fact, India’s IT-BPM (information technology + business process management) industry contributes about 7.3% of GDP in FY 2024-25. 

Meanwhile, on the cryptocurrency side, India now leads global adoption metrics: according to Statista, the number of crypto users in India is projected to grow to 123.35 million by 2026.

Within the same report, it is worth mentioning the user penetration rate, which is the percentage of the population using cryptocurrencies. This rate is expected to be 8.18% in 2025 and is anticipated to increase to 8.35% by 2026.

Given this combination, large-scale tech economy + high crypto adoption + remittance/digital income pathways, it’s not surprising that the Indian government is particularly attentive. 

The possibility of significant inflows of crypto-based value converting into fiat, or being used within India’s economy, presents potential macroeconomic and regulatory challenges (for example, currency stability, tax base erosion, and foreign exchange control). 

Given that this influx could easily destabilize the national economy, it may explain why the authorities are addressing the issue in such a diligent manner.

Accordingly, India has taken a strict stance, imposing heavy taxation on crypto gains, mandating tax deducted at source (TDS) on transactions, and restricting the offsetting of losses. 

All these measures aim to discourage speculative crypto activity and ensure the tax and regulatory system retains visibility and control over value flows.

In the following sections, we will break down exactly how that framework works, what triggers tax, how the rules apply (including offshore/remote work angles), and key implications for anyone in the Indian tech/crypto space.

Is Crypto Taxed In India?

Yes, crypto is heavily taxed in India. There’s no way around it. Since 2022, the Indian government has taken one of the strictest approaches in the world toward taxing cryptocurrencies.

Under the Finance Act of 2022, introduced by the Ministry of Finance and enforced by the Central Board of Direct Taxes (CBDT), all digital assets, including cryptocurrencies and NFTs, are defined as Virtual Digital Assets (VDAs). This update to the Income Tax Act, 1961, officially brought crypto transactions under India’s tax net.

The result is a dual-layer system designed to ensure compliance and discourage speculative trading:

• A flat 30% tax rate applies to all profits from transferring or selling crypto.
• A 1% Tax Deducted at Source (TDS) is automatically withheld by Indian exchanges on each eligible transaction.

This framework treats crypto like a taxable income source rather than a capital asset. Investors are taxed on every gain they realize, whether it’s through selling, swapping, staking, mining, or receiving airdrops.

The system leaves little room for flexibility:

• Losses cannot be deducted or offset against any other income.
• Swapping one token for another counts as a taxable event, as Indian law sees it as selling one asset and acquiring another.
• Converting crypto into INR triggers immediate tax liability.

Essentially, the structure discourages both everyday crypto use and high-frequency trading. 

The government’s position is clear: crypto can exist as an asset class, but it will be tightly regulated and closely monitored.

What Is The Tax Deducted At Source?

The Tax Deducted at Source (TDS) mechanism ensures that taxes are collected immediately at the time of the transaction. Registered Indian exchanges, such as WazirX, CoinDCX, and ZebPay, automatically withhold this 1% from each trade and remit it to the government.

If you use foreign exchanges or decentralized platforms, the responsibility shifts to you. You must self-report the transaction and pay the 1% tax directly. The government doesn’t have access to your foreign wallets, but it can track conversions to rupees (INR) through bank accounts and fiat gateways.

Essentially, you’re taxed without even declaring it, automatically, by using registered exchanges in India. Additionally, if you conduct transactions abroad, you must still self-report.

What About Indian Residents Working Or Studying Abroad?

For Indian nationals who are working remotely, physically living abroad, or studying in another country, there are additional regulations you need to be aware of. 

Two main legal frameworks apply here: 

• FEMA, the Foreign Exchange Management Act, which governs all foreign currency transactions and cross-border fund movements.
• LRS, the Liberalized Remittance Scheme, allows Indian residents to send up to $250,000 USD per year abroad for investments, education, or travel.

If you send remittances abroad or have crypto holdings on foreign platforms, your activity might fall under either of these two legal frameworks. In that case, you must declare your holdings to the Reserve Bank of India (RBI), ensure that your remittances stay within the LRS limit, and report these assets in your Income Tax Return (ITR) and Foreign Asset Schedule (Schedule FA) when required. 

Any transaction might be subject to FEMA’s oversight, and if you make a crypto payment, even within the LRS limit, it could trigger additional scrutiny or taxation. You could also face double taxation if you live in India but trade on a foreign platform, since both India and the host country could tax the same income. 

India is part of the Double Taxation Avoidance Agreement (DTAA) with several countries, which helps offset this. However, to benefit from it, you must report your income correctly. Always consult a qualified crypto tax accountant familiar with the Indian system to avoid penalties or duplicate payments.

While using cryptocurrencies in India isn’t illegal, it’s strictly regulated and heavily taxed. 

Every transaction counts as a taxable event, every gain must be reported, and every wallet that interacts with fiat is closely monitored. This legal framework reflects the government’s scrutiny to protect the rupee, maintain monetary stability, and ensure that digital wealth remains traceable and taxable.

How Much Is Crypto Taxed In India?

In India, crypto gains are taxed at a flat 30% rate, and there’s an additional 1% tax deducted at source (TDS) on each transaction. So yes, you’re going to pay taxes on your crypto in India, and it’s going to be heavy, and it works in more than one way.

So how exactly does it work? If you’re using an Indian-registered exchange, that 1% TDS is already deducted automatically every time you trade or sell crypto. Since this tax is paid at the source, it means you don’t even need to initiate the payment; the exchange does it for you and sends that amount directly to the Income Tax Department.

Now, beyond that 1% that’s already charged by the platform, you still owe 30% tax on your total gains for the financial year. This 30% isn’t charged on every single trade but rather on the net profit you’ve made after subtracting the cost of acquisition, which is what you initially paid to buy the asset.

For example, when you buy crypto, you pay 1% TDS through the platform. When you sell, swap, stake, or receive airdrops or mine tokens, each of those counts as a taxable event, and the 30% tax on gains applies. 

If you swap one token for another, you are considered to have sold the first one, so if there’s any gain, the 30% applies. And if you later convert it to fiat, the national currency, that also triggers a 30% tax on any additional gain since your last transaction.

So yes, taxes can definitely start to accumulate the more you move your crypto around. But does that mean you’re paying 31%? Technically, no. The 1% TDS is not an additional tax; it’s more like an advance payment that gets adjusted against your total tax liability when you file your Income Tax Return (ITR). In other words, if your final tax due for the year is ₹10,000 and you already paid ₹1,000 through TDS deductions, you’ll only owe ₹9,000 more.

Now, this entire system was designed to discourage trading and swapping, which the government refers to as “speculative activity.” 

It does that by creating a cash flow problem for traders. Because that 1% is deducted on every single transaction, frequent traders lose liquidity even if they end up with an overall loss, since they cannot offset crypto losses against other income. And as we said before, you can’t deduct losses from one crypto against another, either. So if you lose, you lose alone.

And as long as you keep swapping, converting, and trading repeatedly, your gains are taxed every time. There’s no compounding relief, no rollover benefit; each realized gain is taxed at 30% independently.

In summary, crypto tax in India works like this: 1% is deducted every time you trade (that’s your TDS), and 30% applies to every gain you realize, no matter how many transactions you make. The 1% doesn’t make it 31% total, but it does make active trading more expensive and a lot less lucrative for Indian users.

What Are The Latest Updates On Crypto Tax In India?

Currently, the Indian government has intensified its efforts to track and penalize crypto tax evasion. In June 2025, authorities arrested an Indian resident suspected of running a cross-border cyber-fraud ring and confiscated cryptocurrency valued at $327,000 USD. 

At the same time, the Central Board of Direct Taxes (CBDT) has instructed regional tax offices to investigate over 400 wealthy cryptocurrency wallets operating on Binance, focusing on transactions that took place between 2022 and 2025.

While no new laws have been added to the Indian tax system yet, this stance clearly indicates that the government plans to track all crypto tax evaders from previous years and potentially use the findings to shape a new legal framework. 

Whether that reform will bring relief or tighter regulation remains to be seen.

When Does the Crypto Tax Rate In India Apply?

TDS is taxed directly on the Indian exchange (1%)  and an additional 30% on your net gains when declaring your taxes for the financial year.

Do You Pay Tax When You Buy Crypto In India?

You don’t pay taxes when you buy cryptocurrency in India, but a small deduction is applied automatically. Every time you purchase or trade through an Indian-registered exchange, a 1% Tax Deducted at Source (TDS) is charged right on the platform. This deduction occurs automatically, without requiring any action on your part, and the exchange transfers it directly to the Income Tax Department.

While buying crypto itself isn’t a taxable event, every other activity you do with it is. For example, swapping tokens, staking, receiving airdrops, or mining is subject to that same 1% TDS, and any gains you make from those actions will be taxed later at 30%. 

So, even though there’s no separate tax when you first buy crypto, that 1% deduction ensures the government tracks your activity from the very first transaction.

How Is Crypto Taxed In India?

The Indian government sees crypto as a virtual asset. It's not a legal tender, meaning that you cannot pay debts with it. It is seen as part of your income. Therefore, every time that you dispose of it or you receive payments with it, it's a taxable event. 

What Does It Mean To Dispose Of Crypto? 

It goes beyond converting crypto to fiat. For example, if you engage in swapping, mining, or receive airdrops, these are considered taxable events, and you will need to pay 30% of your gains when declaring your yearly income. Besides that, you are taxed 1% TDS within the platform that you are using to buy your crypto automatically.

How Can I Calculate My Crypto Tax in India?

To calculate your crypto tax in India, the same rules and advice apply as in any other country. That is:

• Keep detailed records of all your transactions.
• Track the date and time (timestamp) of every trade.
• Record the cost of acquisition, meaning what you paid for the asset.
• Note the type of transaction, whether it’s a sale, swap, airdrop, staking reward, or mining income.

Consider that the 30% tax applies to the profit you make when you sell or exchange crypto, which means you subtract your purchase cost from the value at which you dispose of the asset.

Additionally, keep in mind that if you hold cryptocurrency abroad, you may be subject to double taxation. To avoid being taxed twice, declare any taxes already paid in the country where your crypto is held. 

Remember that India is part of the Double Taxation Avoidance Agreement (DTAA), make sure the country where your crypto is stored is also part of this agreement to ensure your income is only taxed once.

There are several tools that can make this process easier and are widely used among Indian crypto investors, such as Koinly, CoinTracker, and ClearTax Crypto. These platforms automatically import your transaction history from exchanges and calculate your total liability. 

As always, besides doing your own research, it’s highly recommended to consult a certified tax accountant who understands both crypto regulation and Indian tax law, as the rules are complex and often subject to change.

Final Thoughts

Paying crypto tax in India can feel discouraging, demotivating, and, honestly, frustrating. The heavy regulations and close monitoring by the Indian tax authorities make trading crypto a real challenge for investors who simply want to grow their portfolios and explore the Web3 space.

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