Particularly among young investors, cryptocurrencies have lately become a hot issue in India. But profits also carry obligations—mostly taxes. Understanding the tax rate on cryptocurrency trading in India is crucial if you’re trading in Bitcoin, Ethereum, or any other digital currency.
Is Cryptocurrency Legal in India?
Although Bitcoin is not regarded as illegal, it is not official currency either. Though it is closely watched and profits are taxed, the government permits trade.
The Tax Rate on Cryptocurrencies in India
The following describes how the tax rate on cryptocurrency operates in accordance with the regulations put in place in 2022 and still applicable in 2025:
- 30% flat tax on earnings from any virtual digital asset—such as NFTs or Bitcoin—likewise
- 1% TDS (Tax Deducted at Source) on every transaction more than ₹10,000
- Not allowed are any deductions except purchase expenses
- There is no set-off of losses permitted against other income
- You thus pay thirty percent tax if you make a profit. Should you lose, you cannot offset it with another income.
Illustration of the Tax System
Assuming you paid ₹1,00,000 for Bitcoin and sold it for ₹1,50,000,
- Profit: ₹50,000
- Tax = thirty percent of ₹50,000 = ₹15,000
- Additionally, at the time of sale, there will be 1% TDS.
- Tax will still apply even if you reinvest your gains.
When Should One Pay Their Bitcoin Tax?
Regarding the time of your Income Tax Return (ITR):
- TDS is subtracted straight away during the transaction.
- Pay remaining taxes during the financial year-end filing.
To Whom Should One Report Crypto Income?
If you trade on Indian or international crypto exchanges, you have to report your income.
- Make from staking or mining crypto
- Get crypto paid for goods or services
- The tax rate on cryptocurrency is still in effect even if you make a small profit.
Advice to Maintain Compliance
- Document all of your transactions completely.
- From every trade, figure your profit or loss.
- File taxes using systems that let you report cryptocurrencies.
- Show your crypto income; else, you risk fines.
Conclusions
The tax rate on cryptocurrency trading in India is high, but it can be profitable. Whether you are novice or experienced, the 30% flat tax and 1% TDS apply. Make sensible investments and keep on the correct side of the law. Smart investing ultimately also means smart tax planning.