Guide to Crypto Taxes in India

Zac McClure
ByZac McClure, MBAReviewed byTynisa (Ty) Gaines, EAUpdated on May 3, 2023 · minute read
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  • In India, all crypto earnings are taxed at 30%, with 1% of that sum coming from a tax deduction at source (TDS).

  • The TDS requirement poses logistical and accounting challenges for Indian crypto exchanges and traders.

Guide to Crypto Taxes in India

In 2022, the Indian parliament passed new tax rules that are not friendly to crypto. Below, we’ll outline the changes and how they’ll affect how you file your crypto taxes in India. 

How is cryptocurrency taxed in India? 

The new law passed by the Indian government taxes crypto earning at 30%. This includes not only capital gains, but also income from crypto mining. It is the same rate applied to gambling winnings. 

What is the tax deduction at source (TDS)?  

The 30% tax includes a 1% tax deduction at source (TDS) that goes into effect in July 2022.[1]This is a sum that is deducted at the time of purchase; centralized exchanges (CEX) are responsible for making this deduction, but it is unclear how this rule would be enforced for decentralized exchanges (DEX). Investors will receive a tax refund if the sum of their TDS is more than their entire tax liability.

Crypto advocates have vehemently opposed the TDS, saying it will stifle the crypto industry in India and cause accounting nightmares. For example, in the Economic Times, crypto advisor Anoush Bhasin points out that because pairs trading involves two separate transactions, investors in crypto pairs will be taxed twice: 1% on each asset.[2]

In late June 2022, the Central Board of Direct Taxes (CBDT) clarified that it would be the responsibility of exchanges to deduct the TDS from crypto transactions and pay them to the government within 30 days of the end of the month in which the trade was made. The relevant transaction and payment would be reported on a new form called the 26QE. Additionally, the exchange will need to provide documentation of the payment to the trader.[3]

Be aware: going forward, if you make a peer-to-peer crypto swap (ie, not through a crypto exchange), you will need to obtain a tax deduction account number (TAN) so that the TDS can be applied.

Can crypto losses offset capital gains? 

No. The new Indian crypto tax regulation prohibits any income offsetting with crypto losses[4]

Can I deduct bitcoin mining expenses from my crypto taxes? 

No. The new crypto tax law in India does not allow miners to add their infrastructure costs to a mined asset’s cost basis. [5]

Can I deduct ETH gas fees or transaction fees from my crypto taxes?

No. Indian crypto taxpayers may not add any ETH gas fees or transaction fees to a traded asset’s cost basis. 

How are crypto gifts taxed in India?

In India, the crypto gift tax of 30% is applied to the recipient of the gift.

How do I report my crypto taxes in India?  

Individual crypto taxes are reported on Income Tax Return (ITR) 1,2,3, or 4, depending on one's personal circumstances.

The forms’ descriptions from the Income Tax Department are as follows: 

  • ITR 1: For resident individuals with income less than Rs.50lakh coming from salaries or wages, one house property, other sources (interest, etc), and/or agriculture up to Rs.5 thousand.

  • ITR 2: For individuals or Hindu Undivided Families (HUFs) who do not have income from operating a business 

  • ITR 3: For individuals or HUFs who are operating a business or acting as an individual director in a company

  • ITR 4: For resident individuals, HUFs, and non-LLP businesses with salary or wage income less than Rs.50 lakh who also have income from operating a business 

What is the Indian tax deadline? 

The Indian tax year runs from April 1 to March 31, with ITRs usually due on July 31.

However, in recent years there have been glitches with the Indian e-filing system that have pushed the deadline back, so it is good to keep an eye out for extensions to the deadline. 

Learn more about crypto taxes in other countries in our Crypto Tax Guide.

To stay up to date on the latest, follow TokenTax on Twitter @tokentax.

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Last reviewed by Tynisa (Ty) Gaines,EA on May 3, 2023 · Sources

Zac McClure
Zac McClureCo-Founder & CEO at TokenTax
Zac co-founded TokenTax after his career in international finance and accounting at JPMorgan, Imprint Capital and Bain. He has worked in more than half-dozen countries and received his MBA from the UPenn Wharton School.
Tynisa (Ty) Gaines
Reviewed byTynisa (Ty) GainesTax Expert at TokenTax
Tynisa (Ty) Gaines, EA has more than 20 years of experience as a tax professional. Ty has published numerous tax articles, two tax e-books, and an academic publication on cryptocurrency for the National Income Tax Workbook.

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