Indian crypto taxation: What you need to know about rules, reporting, and real-world impact

When you trade or hold crypto in India, you’re dealing with one of the world’s strictest Indian crypto taxation, a set of rules that treat cryptocurrency gains as taxable income with no exemptions for losses. Also known as crypto income tax India, this system was locked in by the government in 2022 and hasn’t changed since—despite global trends moving toward lighter regulation. Unlike most countries, India doesn’t let you offset losses against gains. If you bought Bitcoin for ₹5 lakh and sold it for ₹7 lakh, you owe 30% tax on the ₹2 lakh profit—even if you lost ₹5 lakh on Ethereum the same year.

That 30% tax rate applies to every trade, swap, or conversion. Even swapping one token for another counts as a taxable event. And there’s a hidden layer: a 1% TDS (Tax Deducted at Source), a mandatory 1% fee withheld by exchanges on every crypto transaction above ₹10,000. Also known as crypto TDS India, this isn’t just a reporting requirement—it’s automatic withholding. If you buy ₹50,000 worth of Solana, ₹500 gets taken off the top before you even see your tokens. No one asks for permission. No paperwork. It just happens. This makes small trades expensive and pushes many users toward peer-to-peer platforms or offshore exchanges, even though those carry legal gray areas.

Reporting is just as tough. You need to track every single transaction—buy, sell, swap, stake, earn interest—because the government now requires exchanges to share your data. Platforms like WazirX, CoinSwitch, and ZebPay report directly to the Income Tax Department. If you used a non-Indian exchange like Binance or KuCoin and didn’t report, you’re still on the hook. The tax department uses blockchain analytics to trace wallets and cross-checks bank deposits with crypto activity. Audits are rare, but they’re growing. One trader in Bangalore got a notice in 2024 after his bank flagged ₹80 lakh in deposits matching his crypto trades from two years earlier.

Staking rewards and airdrops? Taxable too. If you earned 5 ETH from staking Ethereum or got 10,000 tokens from a new project, the moment you receive them, they’re treated as income at their market value. No grace period. No exemption. You pay 30% on that value, even if you never sold it. And if you later sell those tokens for more? You pay another 30% on the gain. Double taxation. No way around it.

There’s no legal way to avoid this system. Trying to hide crypto through offshore wallets or fake names won’t work. India’s financial tracking tools are getting smarter, and penalties for non-compliance include fines, asset freezes, and even criminal charges in extreme cases. But here’s the real question: why do millions still trade? Because crypto isn’t just speculation—it’s a hedge against inflation, a bypass for banking restrictions, and a lifeline for freelancers paid in dollars. For many, the tax is a cost of doing business, not a reason to quit.

Below, you’ll find real breakdowns of how Indian traders are handling these rules—what’s working, what’s risky, and what’s outright dangerous. From exchange reports to P2P loopholes, from staking traps to airdrop pitfalls, these posts cut through the noise. You won’t find fluff. Just what you need to know before you trade, earn, or file.