30% Tax on Crypto Gains in India: How Investors Can Stay Compliant

The Indian government has made it crystal clear that Virtual Digital Assets (VDAs) such as cryptocurrencies and NFTs are here to stay, but with strong regulatory oversight. One of the most important rules for investors is the flat 30% tax on crypto gains, introduced in the Union Budget 2022 and applicable from FY 2022–23 onwards.

While this tax structure is straightforward in terms of percentage, compliance is not always simple. Many investors struggle to understand how to calculate taxes, file returns, and stay within the law. In this article, we will break down everything you need to know about the 30% crypto tax in India, the role of 1% TDS, and most importantly, how you can stay compliant while still maximizing your investment potential.

Why Did the Indian Government Impose a 30% Crypto Tax?

Before 2022, crypto gains were in a grey area of taxation. Some taxpayers declared them under capital gains, while others treated them as business income. This lack of clarity created confusion and revenue losses for the government.

To standardize the process, the government introduced Section 115BBH in the Income Tax Act, imposing a flat 30% tax on profits from the transfer of VDAs, irrespective of the holding period. The rationale was:

• To curb speculative trading

• To create a uniform framework for all investors

• To align India with global tax practices on digital assets

Understanding the Tax Rules for Crypto in India

Here’s a breakdown of how the 30% crypto tax works:

1. Flat 30% on Gains

   • Applicable on net profit from crypto transactions.

   • No distinction between short-term or long-term gains.

2. No Set-Off or Carry Forward of Losses

   • Losses from crypto cannot be adjusted against other income (like salary or stocks).

   • Losses also cannot be carried forward to future years.

3. No Deductions Allowed

   • Apart from the cost of acquisition, no deductions (such as exchange fees, electricity costs for mining, or internet charges) are allowed.

4. 1% TDS Rule

   • Every transaction above ₹50,000 (₹10,000 in some cases) attracts 1% TDS under Section 194S.

   • This TDS is deducted by exchanges or counterparties and reflected in Form 26AS.

5. GST on Crypto Services

   • Exchange transaction fees also attract 18% GST, further increasing trading costs.

Example of How 30% Tax Works

Suppose you bought Bitcoin worth ₹2,00,000 in August 2024 and sold it for ₹3,00,000 in January 2025.

• Cost of Acquisition: ₹2,00,000

• Sale Value: ₹3,00,000

• Profit: ₹1,00,000

Now, your tax liability would be:

• Flat 30% on ₹1,00,000 = ₹30,000

• Add 4% cess = ₹1,200

• Total Tax = ₹31,200

Additionally, if your sale transaction exceeded the threshold, a 1% TDS would have already been deducted at the time of sale.

How to Report Crypto Gains in ITR

The Income Tax Department has introduced Schedule VDA in ITR forms to ensure proper disclosure. Here’s how you should report:

• For Investors: Use ITR-2 and declare VDA transactions under Schedule VDA (Capital Gains).

• For Traders/Businesses: Use ITR-3 if you are engaged in frequent trading or mining (classified as business income).

While filling Schedule VDA, you’ll need:

• Date of acquisition

• Date of transfer

• Cost of acquisition

• Sale value

• Net gain/loss

The reported profits are automatically taxed at 30% and reflected in the total tax liability.

Penalties for Non-Compliance

Failing to report crypto gains or misclassifying them can lead to strict penalties:

• Penalty equal to the tax evaded

• Interest charges for delayed payment

• Prosecution in extreme cases of tax evasion

Given the government’s increased focus on digital transaction tracking, staying compliant is the only safe option.

How Investors Can Stay Compliant

1. Maintain Detailed Records

   • Keep transaction history from exchanges.

   • Save wallet transfers, timestamps, and trade confirmations.

2. Track TDS Credits

   • Ensure 1% TDS deducted is visible in your Form 26AS.

   • Claim this while filing ITR to avoid double taxation.

3. Use the Correct ITR Form

   • Occasional investor → ITR-2

   • Frequent trader/miner → ITR-3

4. Plan Tax Payments

   • Set aside 30% of your profits at the time of booking gains.

   • This prevents cash flow issues during tax filing season.

5. Consult a Tax Expert

   • A CA specializing in crypto taxation can simplify compliance and optimize your filings.

The Role of Technology in Managing Crypto Taxes

With hundreds of trades happening across multiple wallets and exchanges, calculating taxable income manually is a nightmare. This is where intelligent platforms like Geltorapex play a significant role. By using automation and AI, investors can track trades, calculate real-time gains, and generate tax-ready reports seamlessly.

Similarly, resources like geltorapex.net empower investors to manage crypto portfolios while staying ahead on compliance. By leveraging technology, you can eliminate human error, save time, and ensure stress-free reporting.

Global Perspective on Crypto Taxation

India is not alone in imposing strict taxes on crypto gains. Here’s how other countries handle it:

• USA: Crypto taxed as property; gains subject to short/long-term capital gains tax.

• UK: Capital gains tax applies, with exemptions for small profits.

• Japan: Crypto income taxed as “miscellaneous income” with rates up to 55%.

• Singapore: No capital gains tax on crypto but business income is taxable.

Compared to these, India’s flat 30% rule is among the harshest, making compliance costly for active traders.

Can the 30% Crypto Tax Be Reduced?

The crypto community in India has been lobbying for a reduction in the tax rate and relaxation of the TDS rule. While the government has not announced changes yet, there is ongoing debate on:

• Reducing TDS from 1% to 0.01% (to improve liquidity)

• Allowing loss set-offs like stocks

• Lowering the flat 30% rate for small investors

Until these changes are implemented, investors must operate within the existing framework.

Smart Tips to Minimize Crypto Tax Burden

1. Strategic Selling

   • Sell in smaller tranches to manage TDS better.

2. Use Indian Exchanges

   • Easier to track TDS credits and compliance.

3. Diversify Across Assets

   • Balance crypto with traditional investments for overall tax efficiency.

4. Keep Personal & Business Separate

   • If you trade as a business, open separate bank accounts and maintain separate books.

5. File Early

   • Avoid last-minute errors by preparing tax data well before deadlines.

Conclusion

The 30% tax on crypto gains in India may appear discouraging, but it is now an integral part of the financial system. Rather than avoiding compliance, smart investors are focusing on accurate reporting, strategic planning, and leveraging AI-powered tools to simplify the process.

By maintaining proper records, using the right ITR form, and planning your trades with taxes in mind, you can stay fully compliant and avoid penalties.

The future of crypto taxation in India may evolve, but for now, the key to success lies in understanding the rules and aligning your investment strategy accordingly.