Crypto Taxation in India: The Current Scenario
India introduced formal crypto tax rules in the 2022 Union Budget, bringing digital assets under the Income Tax Act. With a 30% tax slab and 1% TDS, these regulations have reshaped how investors handle cryptocurrency transactions. This guide explains crypto tax slabs in India, compliance requirements, and their impact on traders.
Understanding Crypto Tax Slabs in India
The Indian government classifies cryptocurrencies as Virtual Digital Assets (VDAs) with these tax rules:
- 30% Flat Tax on Gains: All crypto income (trading, mining, staking) taxed at 30%, excluding deductions for expenses.
- 1% TDS on Transactions: 1% tax deducted at source for transfers exceeding ₹50,000/day (₹10,000 for specific users).
- No Loss Offset: Crypto losses cannot offset gains from other income sources.
How Crypto Tax Slabs Impact Investors
- 75% drop in trading volumes on Indian exchanges post-tax implementation
- Increased shift to decentralized exchanges (DEXs) and offshore platforms
- Higher compliance burden for retail traders
Step-by-Step Crypto Tax Compliance Process
- Calculate taxable income from all crypto transactions
- Maintain records of trades, wallets, and exchange statements
- File returns using ITR-2 or ITR-3 forms before July 31
- Report foreign crypto holdings under Schedule FA
FAQs: Crypto Tax Slabs in India
Q1. Is cryptocurrency legal in India?
A: While taxed, crypto remains unregulated. The government warns investors of market risks.
Q2. How is crypto income taxed?
A: All gains taxed at 30% regardless of holding period. No distinction between short-term and long-term.
Q3. Can I carry forward crypto losses?
A: Losses can only offset future crypto gains for 8 assessment years.
Q4. Are crypto gifts taxable?
A: Gifts exceeding ₹50,000 taxed at receiver’s income slab rate.
Q5. Penalty for non-compliance?
A: 50-200% penalty on tax due + possible prosecution under Section 276CC.
Future of Crypto Taxation in India
Experts anticipate clearer regulations and potential TDS reductions to curb capital flight. The proposed 28% GST on crypto transactions remains pending. Investors should monitor RBI’s digital rupee (CBDC) developments, which might influence future crypto policies.
