In India, cryptocurrency is no more a murky area.
Whether you purchase, sell, or give cryptocurrencies like Bitcoin, Ethereum, or others—you will now be subject to tax in cryptocurrency.
The Indian government has made the regulations plain; if you invest in cryptocurrency, you should be aware of the taxation policies.
Let’s dissect it methodically in easy language.
Is legal cryptocurrency for India?
Though not controlled as official currency, cryptocurrency is lawful.
Though they are taxed under unique laws, you can acquire, trade, or hold cryptocurrencies.
How does cryptocurrency charge tax?
A unique tax system was instituted starting on April 1, 2022:
1. Flat 30% Profit Tax
Every profit from bitcoin sales is taxed at thirty percent.
Whichever your income level — the rate is set.
Not permitted are deductions except for purchasing expenses.
For instance, buy Bitcoin for ₹1,00,000 then sell for ₹1,50,000; the profit is ₹50,000 ± tax.
2. 1% TDS—Tax Deducted at Source
The platform subtracts 1% TDS when you sell crypto.
Applies should total transactions in a financial year above ₹10,000 (₹50,000 in some situations).
You can claim this TDS as you file your ITR.
3. Not a Set-off or Carry Forward of Loss
You cannot match crypto losses against other revenue.
You cannot advance losses in cryptocurrencies to next years.
Every transaction is handled differently.
When is your tax payment scheduled?
Tax is paid on the earnings from selling or trading bitcoin.
Tax applies even if you trade one cryptocurrency for another—say, Bitcoin to Ethereum.
Should you be paid crypto either as gift or payment, it is taxed as income.
How to Report Cryptocurrency in ITR
Report gains under a new area for “Virtual Digital Assets (VDA)”
Depending on additional sources of income, use ITR-2 or ITR-3.
Clearly state all elements of any cryptocurrency transaction.
Claim TDS credit using Form 26AS
Airdrops and Tax on Crypto Mining
Mining cryptocurrency results in taxes as company income.
Gift or airdropped tokens are taxed at market value upon receipt.
Strategies to Remain Tax-Compliant
Track all of your cryptocurrency exchanges.
Use Indian systems designed to automatically deduct TDS.
View TDS information in your Form 26AS.
Remember also to document crypto transactions based on foreign currencies.
If you deal often or in great quantities, consult a CA.
In essence, conclusion
Tax in cryptocurrency is now subject to strong and transparent regulations.
Without deductions, every profit you make is taxed at thirty%.
To avoid fines, make sure you honestly record every bitcoin transaction on your income tax return.
Although crypto is a high-risk, high-reward asset, tax issues shouldn’t let ruin of your winnings.