Crypto Tax India: What You Need to Know About Reporting Crypto Gains

When you buy, sell, or trade cryptocurrency in India, you’re not just investing—you’re creating a crypto tax India, a legal obligation to report digital asset profits to the Indian Income Tax Department. Also known as cryptocurrency taxation, this isn’t optional. The government treats crypto like property, not currency, meaning every trade, swap, or sale could trigger a taxable event. If you bought Bitcoin in 2021 and sold it in 2024 for a profit, that gain is taxable. Even if you traded ETH for SOL, that’s a taxable transaction. There’s no exemption for small amounts or personal use.

India’s tax system for crypto is strict and clear: a flat 30% tax on all gains, with no deductions for losses. That’s different from stocks, where you can offset losses against gains. If you lost ₹50,000 on one coin but made ₹80,000 on another, you still pay 30% on the full ₹80,000. Plus, there’s a 1% TDS on every crypto transaction above ₹50,000 (or ₹10,000 in a single day), collected by exchanges like WazirX or CoinDCX. This means even if you don’t cash out, the exchange takes money upfront. You can’t ignore this. The Income Tax Department now has direct access to exchange data through the Central Board of Direct Taxes (CBDT) and uses AI tools to flag suspicious activity.

Reporting isn’t just about profits. If you received crypto as a gift, airdrop, or staking reward, it’s taxable as income at its fair market value when you got it. For example, if you earned 0.5 ETH from staking in 2024 and it was worth ₹1.2 lakh at the time, that’s your taxable income. You don’t need to sell it to owe tax—you owe it the moment you receive it. And if you send crypto to a friend or family member, that’s a gift. If the value exceeds ₹50,000 in a year, the recipient pays tax on it. There’s no family exemption.

Many people think using a VPN or moving crypto to an offshore exchange hides their activity. It doesn’t. Indian exchanges report to the government. Even if you use Binance or Kraken, your bank transactions, UPI payments, or wallet addresses linked to Indian IDs can trigger an audit. The government already has data from over 12 million crypto users. Penalties for non-compliance include fines up to 200% of the tax due, interest charges, and even prosecution.

So what do you do? Keep records. Track every transaction—buy price, sell price, date, platform, and fee. Use free tools like Koinly or CoinTracker to auto-import your trades. File your returns using ITR-2 or ITR-3, depending on your income. Don’t wait until April. Start now. The next audit could come from a single flagged transaction.

Below, you’ll find real-world examples of how crypto tax India works—what people got wrong, what they missed, and how to avoid becoming a statistic. No fluff. Just what you need to stay compliant and keep your money.