As crypto investing becomes popular in India, people are suffering losses in the market. This begs a big question: what happens when you lose money on cryptocurrency? Does taxation offer any benefits? Let’s keep things simple when talking about crypto losses tax.
One can claim crypto losses to reduce taxes?
In summary: No.
India forbids the tax benefits from crypto losses. Should you lose money trading Bitcoin, Ethereum, or any other digital asset, there is no way to offset it with another income. This guideline is not like those of mutual funds or stock tax rules.
Indian Crypto Current Tax Rule
The government’s comments here are:
- Taxes on cryptocurrencies are thirty percent flat.
- One cannot use crypto losses to reduce any income tax.
- Pay 1% TDS on every crypto sale or transfer as well.
You thus pay TDS even if your selling results in losses.
Allow me to clarify with a case study:
You made ₹1,00,000 profit using Bitcoin; your taxes come out to ₹30,000.
On Ethereum you lost ₹60,000; you cannot write this off from the profit.
You still pay full taxes on the ₹1,00,000; the ₹60,000 loss is ignored.
The way the present regulation specifies crypto losses tax is this.
Not a Set-off nor a Carry Forward
With shares and real estate, typically you can start losses or carry them forward into the next year. But with cryptocurrencies: no set-off allowed against any income—including profit. No carry forward into the next year. Every crypto deal is handled personally.
Should you still register your losses?
Always, indeed. Monitoring your crypto performance is smart even though tax benefits are not there from losses. Keep track of things in case future regulations evolve. If tax authorities ask for specifics, be honest.
Last thought
Though it seems harsh, the current law relevant in India is the crypto losses tax rule. If you trade coins, use caution with your moves. Assume showing losses won’t reduce your tax load. Track your trades, pick up some rules, and always accurately report your taxes. Although crypto is interesting, your tax strategy should be sensible and consistent.
