In India, cryptocurrencies are no more only a catchphrase. Digital coins including Bitcoin, Ethereum, and others are being bought, sold, and invested in by many. But tax rules accompany the gains as well. If you deal with cryptocurrencies, you should be aware of Indian cryptocurrency tax rules.
Is Indian legal cryptocurrency?
India does not forbid cryptocurrencies. You can own, buy, and sell it. Still, it is more of an asset than a currency; it is not regarded as such. Indeed, the income from cryptocurrencies is liable taxes.
Crypto Income Taxed: How?
Any income from trading or transferring cryptocurrencies is now subject to a flat 30% tax under the new cryptocurrency tax rules.
This implies: The tax rate is always thirty percent regardless of your income.
You cannot claim any deductions (except from purchase costs).
What Exactly Counts as Crypto Income?
If you profitably sell crypto, you will be taxed.
Change one crypto for another.
Get paid for services using cryptocurrencies.
Mine and profit fresh cryptocurrencies
According to cryptocurrency tax rules, all of these are taxable items.
The 1% TDS Rule
Apart from the 30% tax, crypto transactions carry 1% TDS (Tax Deducted at Source).
It is relevant if annual trade totals cross ₹10,000 (₹50,000 in some circumstances).
It is deducted from the trade upon crypto sale.
Your income tax return still needs to be filed and income reported.
No Set-Off for Death
Many people overlook this important rule: once you lose money on one cryptocurrency trade, you cannot offset it with another cryptocurrency gain.
You also cannot change it against rent or another source of income.
Neither can losses forward to the following year.
The cryptocurrency tax rules become extremely strict as a result.
For ₹1,00,000 you bought Bitcoin and sold it for ₹1,50,000.
Profit = fifty,000
Tax = thirty percent of ₹50,000 = ₹15,000
Moreover 4% cess = ₹600.
Total tax is ₹15,600. (You still pay this even if other trades suffered losses.)
How should one document crypto income?
Files your ITR using Schedule VDA.
If at all possible, mention every trade.
If you are routinely profitable, pay advance taxes.
Final Notes
India has clear but strict cryptocurrency tax rules. Don’t overlook taxes whether your trading frequency is regular or just exploratory. Record events, timely file returns, and keep current with legal changes. Though it is digital, the tax on cryptocurrencies is rather actual.