India’s 30% Crypto Tax: A Hard Reality for Bitcoin Traders
If you’re trading Bitcoin or any other cryptocurrency in India, you’re paying 30% in taxes on every profit - no matter how long you held it. That’s not a typo. Unlike stocks or real estate, where holding an asset for over a year lowers your tax rate, crypto gains in India are taxed at the same flat rate whether you held Bitcoin for 10 days or 10 years. And there’s no relief if you lost money elsewhere in your portfolio. This isn’t just strict - it’s unique in the world.
How the 30% Tax Actually Works
The tax comes from Section 115BBH of the Income Tax Act, introduced in April 2022. It applies to all Virtual Digital Assets (VDAs), including Bitcoin, Ethereum, Solana, NFTs, and even meme coins. The math is simple: (Sale Price - Purchase Price) × 30% = Tax Due.
Here’s an example: You bought 0.5 BTC for ₹15,00,000 in January 2023. In June 2025, you sold it for ₹22,00,000. Your profit? ₹7,00,000. Your tax? ₹2,10,000. That’s 30% of the gain - gone. No deductions. No offsets. Not even for the ₹1,200 in exchange fees you paid or the ₹800 gas fee on the transfer.
And here’s the kicker: if you bought another coin and lost ₹5,00,000 on it, you can’t use that loss to reduce your ₹7,00,000 profit. You still pay tax on the full ₹7,00,000. That’s not how taxes work anywhere else. In the U.S., you can net losses against gains. In Germany, you pay zero after one year. In India? You pay 30% on every single profit, even if your total portfolio is down for the year.
The Hidden 1% TDS - And Why It Matters
On top of the 30% tax, there’s a 1% Tax Deducted at Source (TDS) under Section 194S, active since July 2022. This applies to every crypto sale or transfer over ₹50,000 in a financial year (₹10,000 for certain cases like P2P trades). That means if you sell ₹1,00,000 worth of Bitcoin, ₹1,000 is taken out before you even see the money.
Many traders don’t realize this is separate from the 30% tax. The TDS is a prepayment - it gets credited against your final tax bill when you file your return. But if you’re a frequent trader, that 1% adds up fast. Sell ₹10 lakh across 10 trades? That’s ₹10,000 withheld. You’ll get it back if your total tax liability is less, but if you’re in the 30% bracket, you won’t. It’s just another layer of cash flow disruption.
Worse, not all platforms handle TDS the same way. Some Indian exchanges auto-deduct it. Others don’t. If you trade on international platforms like Binance or Kraken, you’re still legally required to report and pay the TDS yourself. Many traders miss this and get hit with penalties later.
The New 18% GST on Exchange Fees - Another Bite
Starting July 2025, India added an 18% Goods and Services Tax (GST) on fees charged by crypto exchanges and wallet services. That includes trading fees, withdrawal fees, staking rewards processing, and even API access fees.
Let’s say you pay ₹500 in trading fees on WazirX. Now, you’re paying ₹90 extra in GST. If you make 20 trades a month, that’s ₹1,800 a year in GST - just on fees. And it’s not refundable. Even if you break even or lose money, you still pay this tax on every service you use.
This three-tier system - 30% income tax, 1% TDS, and 18% GST - makes India the most heavily taxed crypto market in the world. No other country combines all three. You’re being taxed on your profit, on your transaction, and on the platform’s service fee. It’s a triple tax burden.
Why Losses Don’t Count - And Why That’s a Problem
Most countries let you offset crypto losses against gains. India doesn’t. This is the most damaging rule for active traders.
Imagine this: You trade 15 different coins in a year. You make ₹4,00,000 on Bitcoin, lose ₹3,50,000 on Dogecoin, gain ₹1,00,000 on Solana, and lose ₹1,50,000 on Shiba Inu. Your net gain? ₹0. But under Indian law, you still owe 30% on the ₹4,00,000 from Bitcoin and ₹1,00,000 from Solana. That’s ₹1,50,000 in taxes on zero net profit.
It forces traders to pay taxes on paper gains while carrying real losses. Many end up selling winning coins just to cover their tax bills - even if they still believe in the asset. That’s not investing. That’s survival.
There’s no carry-forward either. If you lose money this year, you can’t use it next year. The loss disappears. The tax doesn’t.
What You Need to Track - And How to Do It
Keeping records isn’t optional. The Income Tax Department now requires you to report all crypto transactions in Schedule VDA on your ITR. You need:
- Date of every purchase and sale
- Amount bought/sold in INR and crypto
- Exchange or wallet used
- Transaction ID and proof of payment
- Cost basis (what you paid, including fees)
Manual tracking is a nightmare. If you’ve traded across 5 exchanges, used Trust Wallet, MetaMask, and a P2P app, you’re looking at hundreds of transactions. One missed entry can trigger an audit.
Most serious traders now use crypto tax software like Koinly or ClearTax. These tools connect to exchanges via API and auto-calculate your gains, losses, TDS, and GST. They even flag if you forgot to report a P2P trade. For active traders, spending ₹2,000-₹5,000 a year on software saves hours and avoids penalties.
How This Tax Has Changed India’s Crypto Market
Since April 2022, trading volumes on Indian exchanges dropped by 40-60%. Retail traders left. Many moved to international platforms or P2P markets to avoid TDS and reporting. But that’s risky - you’re still liable under Indian law, and the government can track blockchain addresses.
Long-term holders are now the majority. Why? Because the tax punishes activity. If you’re buying and holding Bitcoin for 5+ years, you’re less affected. But if you’re day trading, swing trading, or arbitraging - you’re paying a premium just to participate.
Indian exchanges have lost market share to Binance, Bybit, and OKX. Institutional investors stay away. Why invest in crypto when you’re taxed like a high-income trader with no loss protection? The government’s goal was to generate revenue. It did. But it also choked innovation.
What’s Next? No Changes in Sight
As of September 2025, there are no plans to change the 30% rate, TDS, or GST rules. The Finance Ministry says the system is working - it brought in ₹1,800 crore in crypto tax revenue in FY 2024-25. But experts warn it’s unsustainable. Traders are leaving. Startups are relocating. Tax professionals say the system is too complex for average users.
Some hope the government will allow loss offsetting by 2027. Others think the TDS threshold might rise from ₹50,000 to ₹2,00,000. But until then, you’re stuck with the rules as they are.
What Should You Do?
Here’s the reality: You can’t avoid the tax. But you can manage it.
- Use tax software - don’t guess.
- Track every transaction, even small ones.
- Don’t assume your exchange is handling everything - verify TDS deductions.
- Hold longer if you can. The tax doesn’t care, but your wallet will.
- Don’t trade on P2P without recording it - the government can trace it.
- Consult a chartered accountant familiar with crypto - it’s worth the fee.
India’s crypto tax isn’t fair. It’s not logical. But it’s the law. The only way to win is to know it inside out - and plan around it.
Is the 30% crypto tax in India applicable to losses?
No, the 30% tax applies only to profits. But you can’t use losses from one cryptocurrency to reduce your tax on gains from another. Even if your overall portfolio lost money, you still pay tax on every individual profit. Losses cannot be carried forward to future years.
Do I have to pay tax if I trade crypto on international exchanges?
Yes. If you’re an Indian tax resident, you owe taxes on all crypto gains worldwide, regardless of where you trade. Indian law applies to your income, not your exchange’s location. Failing to report can lead to penalties or legal action.
What happens if I don’t pay the 1% TDS on crypto?
If you don’t pay TDS and the exchange didn’t deduct it, you’re still responsible for paying it yourself during tax filing. The Income Tax Department can match blockchain data with your return. Non-compliance can lead to notices, interest, and penalties of up to 100% of the unpaid tax.
Can I claim expenses like gas fees or exchange fees as deductions?
No. Only the original purchase price of the crypto counts as a deduction. Fees, gas charges, wallet costs, and even subscription fees to tax software are not deductible under Section 115BBH. The tax is calculated on gross profit, not net profit.
Is gifting crypto taxable in India?
Yes. If you receive crypto as a gift and its value exceeds ₹50,000 in a year, it’s treated as income and taxed at your slab rate. The giver doesn’t pay tax, but the receiver does. This applies even to gifts from family members.
How do I report crypto on my income tax return?
You must file ITR-2 or ITR-3 and include Schedule VDA (Virtual Digital Assets). You need to report total gains, total losses, TDS deducted, and GST paid. All transactions must be listed by date, asset, amount, and exchange. Use tax software to generate the report - manual entries are error-prone.
Will India ever lower the 30% crypto tax?
There’s no official indication yet. The government has collected over ₹1,800 crore since 2022, and there’s strong resistance to lowering the rate. However, pressure from traders, industry groups, and falling volumes may lead to changes by 2027 - possibly allowing loss offsetting or raising TDS thresholds. But don’t count on it.
1 Responses
Bro this tax is insane 😠I sold my ETH last month and got slapped with 30% tax plus 1% TDS then another 18% on the fee... I ended up with less than I started with 💸 India really wants us to stop trading lmao