As of 2024, understanding the tax implications of cryptocurrency transactions in India is not just beneficial but essential for every investor. This guide aims to demystify the taxation rules surrounding cryptocurrencies, providing you with a clear, detailed, and easy-to-understand overview of how much is the taxation on cryptocurrency in India.
| Transaction Type | Tax Rate | TDS | Additional Notes |
| Trading Cryptocurrency | 30% | 1% | Gains from buying and selling cryptocurrencies are taxed. |
| Receiving Cryptocurrency | 30% | – | Payment for services, airdrops, mining – taxed at fair market value on the date of receipt. |
| Mining Cryptocurrency | 30% | – | Acquisition cost is ‘Zero’; no expenses are deductible. |
| Staking/Forging | 30% | – | Income at the time of receipt is taxed, and again upon sale. |
| Crypto to Crypto Swap | 30% | 1% | Both parties in a swap transaction are subject to TDS. |
| Spending Crypto on Goods/Services | 30% | 1% | Tax applies on the gains if the crypto used had appreciated in value since acquisition. |
| Gifting Cryptocurrency | Varied | – | Taxable if value exceeds ₹50,000 and not exempt. Receiver’s tax may apply based on specific conditions. |
| P2P Transactions | 30% | 1% | Buyer is responsible for deducting TDS. Includes buying with INR on P2P platforms. |
| Mining and Staking Income | 30% | – | Taxed at fair market value at the time of receipt. No deduction for acquisition cost or expenses. |
| Airdrops | 30% | – | Taxed on fair market value at the time of receipt and again upon sale. |
| Crypto Gifts | – | – | Taxable if value > ₹50,000 unless exempt (e.g., from relatives, on marriage, etc.). |
| Losses from Crypto Transactions | Not offsettable | – | Losses cannot be offset against other income. |
| Disclosure Requirements | – | – | Mandatory for companies; voluntary for individuals but recommended. |
Notes:
Whether you’re a seasoned trader or new to the crypto world, this comprehensive article will equip you with the knowledge to make informed decisions, ensuring your investments are compliant with the law.
Cryptocurrency, a digital asset designed to work as a medium of exchange, utilizes cryptography to secure transactions, control the creation of additional units, and verify the transfer of assets. Its decentralized nature challenges traditional financial systems by operating outside the control of central authorities.
In India, the rising interest in cryptocurrencies like Bitcoin, Ethereum, and Dogecoin has prompted regulatory bodies to classify these digital assets under the umbrella term “Virtual Digital Assets” (VDAs). This classification aims to bring clarity and structure to the taxation of cryptocurrencies, ensuring that investors are well-informed about their tax obligations.
In the table above, you can see that crypto taxation of 30% is applicable irrespective of the tax slab an individual falls into.
Crypto taxation of 30 % is levied on crypto trading, mining, buying and selling after holding for any period,crypto-to-crypto swaps, P2P transactions, exchanging crypto for goods and services, airdrops and income earned from staking.
Calculating taxes on cryptocurrency transactions involves determining the gains, which are the difference between the sale price and the cost price.
For instance, if you purchase cryptocurrency, say Bitcoin for ₹60,000 and sell it for ₹80,000, the taxable gain would be ₹20,000, attracting a 30% tax.
Additionally a TDS of 1% wherever applicable. Here is a table of scenarios where TDS on crypto in India.
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Here’s a table presenting the scenarios where TDS is applicable in crypto transactions, along with exceptions and exemptions:
| Scenario | TDS Applicability | Details |
| Selling Cryptocurrency for INR | Yes | A 1% TDS is deducted from the total transaction value. |
| Buying Cryptocurrency with Another Crypto | Yes | TDS is applicable on the value of the cryptocurrency used for the purchase. |
| Selling Cryptocurrency for Another Crypto | Yes | A 1% TDS is charged on the INR value of the cryptocurrency sold. |
| Exceptions and Exemptions | ||
| Transactions below Rs 50,000 (for individuals) / Rs 10,000 (for others) per financial year | No | These transactions are exempt from TDS. |
| Transferring crypto between wallets owned by the same individual | No | TDS is not applicable on these transfers. |
In peer-to-peer transactions, the buyer is responsible for deducting and remitting the 1% TDS to the government. This fosters a culture of accountability and transparency in the crypto space.
These transactions are subject to a 1% TDS from both parties, ensuring that tax obligations are met even when fiat currency is not involved.
The income from mining and staking is taxed at the point of receipt, and again when such assets are sold, with the initial acquisition cost considered as zero. This reflects the government’s stance on rewarding the computational contributions of individuals to the blockchain network.
Answer: A flat rate of 30% plus cess and a 1% TDS on transactions exceeding specified thresholds.
Answer: Taxes are calculated on the gains, which is the sale price minus the cost price.
Answer: For the financial year 2022-23 and onwards, investors need to use the ITR-2 or ITR-3 forms, depending on whether the gains are categorized as capital gains or business income.
Answer : No, TDS is not applicable on wallet transfers if they belong to the same owner.
Answer: Failing to comply with TDS regulations can lead to hefty penalties, including fines and imprisonment. It is mandatory to comply with the TDS rules.
Mudrex users can easily request detailed tax statements within the platform, thanks to an integration with ClearTax. This feature simplifies tax reporting for crypto investments by generating comprehensive, ClearTax-derived tax calculations based on their crypto investments with Mudrex.
Navigating the taxation landscape of cryptocurrencies in India requires a clear understanding of the regulatory framework, taxable events, and compliance requirements. With the Indian government’s firm stance on the taxation of Virtual Digital Assets, investors are better positioned to make informed decisions, ensuring their investments are both profitable and compliant.
As the digital currency market continues to evolve, staying informed about the latest tax regulations will be crucial for anyone looking to invest in cryptocurrencies in India. This guide serves as a comprehensive resource, aiming to demystify the complexities of crypto taxation and empower investors with the knowledge needed to navigate the crypto economy with confidence.
