#IndiaCryptoTax Crypto Taxation in India: A Step-by-Step Guide

Cryptocurrency gains are taxed as Virtual Digital Assets (VDAs) in India, with specific rules and regulations applying to different scenarios.

Tax Rates and Rules

Tax on Crypto Gains: 30% tax rate applies to profits from selling, swapping, or spending crypto assets, with no distinction between short-term and long-term gains.

1% TDS: A 1% Tax Deducted at Source (TDS) applies to all crypto transactions exceeding INR 10,000, deducted from the final sale amount.

Reporting Crypto Taxes in ITR

Schedule VDA: Starting from FY 2025-2026, crypto gains will be reported under a dedicated Schedule VDA in the Income Tax Return (ITR).

Mandatory Reporting: Crypto exchanges and entities will submit detailed reports to tax authorities to ensure compliance.

Step-by-Step Guide to Reporting Crypto Taxes

Calculate Your Gains: Determine your profits from crypto transactions, considering the 30% tax rate.

Claim TDS Credits: Claim credits for the 1% TDS deducted on your transactions.

File Your ITR: Report your crypto gains in the ITR, using the Schedule VDA section.

Pay Your Taxes: Pay the applicable taxes on your crypto gains.

Avoiding Penalties

Timely Filing: File your ITR on time to avoid late fees and penalties.

Accurate Reporting: Accurately report your crypto gains to avoid penalties for under-reporting or misreporting.

TDS Compliance: Ensure TDS compliance to avoid penalties and interest charges ¹.

Additional Considerations

Gifts and Airdrops: Crypto gifts and airdrops are taxable, with the recipient liable to pay income tax at a flat rate of 30%.

DeFi Transactions: DeFi transactions, such as yield farming and lending, are subject to taxation.

Mining: Crypto mining itself isn't taxed, but earnings from mining are treated as business income and taxed accordingly.