How to Handle Crypto Tax in India (2025 Guide)

If you have bought, sold, swapped, or received crypto in India, you have a tax obligation — one that comes with some of the harshest rules in the tax code. Since the Finance Act 2022 introduced the Virtual Digital Asset (VDA) framework, the rules are clear and unforgiving. This guide walks you through everything you need to know before you file.

What counts as a taxable crypto event in India

The tax clock starts the moment any of these happen:

• Selling crypto for INR — selling BTC, ETH, or any VDA on an exchange like WazirX, CoinDCX, or Binance.
• Swapping one crypto for another — converting BTC to ETH counts as a disposal of BTC at its market value on that day.
• Spending crypto on goods or services — using USDT to pay a vendor is a taxable event at market value.
• Receiving crypto as payment or a gift — taxed at market value on the date of receipt.
• NFT sales — NFTs are classified as VDAs and follow the same 30% rule.

Buying crypto with INR and simply holding it is not a taxable event. The tax arises only at the point of disposal.

How the 30% tax is calculated

The gain is: Sale Price − Cost of Acquisition = Gain. That gain is taxed at exactly 30%. Unlike equity, there is no long-term vs short-term distinction — the rate is always 30% whether you held for one day or five years.

• No deductions: Exchange fees, transfer fees, and platform costs cannot be deducted from the gain.
• No indexation: The cost of acquisition is your actual purchase price in INR — no inflation adjustment.
• No loss set-off: A loss on one crypto trade cannot reduce your gain on another trade, nor can it reduce salary, rental, or any other income.
• 4% health and education cess is added on top of the 30%, making the effective rate 31.2%.

Understanding the 1% TDS

Under Section 194S of the Income Tax Act, exchanges deduct 1% Tax Deducted at Source (TDS) on every sale or swap above ₹10,000 in a financial year (₹50,000 for specified persons). This is not your final tax — it is an advance payment credited against your overall tax liability. It will appear in your Form 26AS.

Peer-to-peer trades and non-compliant foreign exchanges may not deduct TDS. You are still responsible for paying the tax. If the exchange did not deduct TDS and you did not pay advance tax, you will owe interest under Sections 234B and 234C on top of the principal.

How to calculate your gain step by step

1. Export your transaction history from every exchange you used — most provide a CSV or Excel download from the account dashboard.
2. Convert every trade to INR at the prevailing market rate on the date of each transaction. Use the exchange rate recorded by the platform itself.
3. Apply FIFO (First In, First Out) — the oldest coins are treated as sold first. Use this method consistently across your return.
4. Sum all gains trade by trade. You cannot net gains against losses across different VDA trades.
5. Subtract TDS already deducted from your calculated tax payable to find what you still owe.

Where to report in your ITR

Crypto income is reported in ITR-2 if you have no business income, or ITR-3 if you do. The relevant schedule is Schedule VDA, added to ITR forms from AY 2023-24 onwards.

• Each VDA transaction must be reported separately in Schedule VDA.
• The 30% tax flows into Schedule SI (Special Income) at the flat rate.
• TDS from Form 26AS is claimed in the TDS schedule.
• Crypto received as a gift is reported under Schedule OS (Other Sources) at market value on the date of receipt.

Common mistakes that attract tax notices

• Ignoring foreign exchange transactions. CoinDCX and WazirX report data to the Income Tax Department. Foreign exchanges may not, but income is still taxable. Don't assume non-reporting by the exchange means non-reporting by you.
• Netting losses against other income. Filing returns that offset crypto losses against salary or capital gains from equity is incorrect and will likely trigger a scrutiny notice under Section 143(2).
• Missing airdrop and staking income. Tokens received via airdrop or staking rewards are taxable as income in the year of receipt, at market value on the day they arrived in your wallet.
• Wrong cost basis for gifted crypto. When you receive crypto as a gift, your cost of acquisition is the original purchase price the gifter paid — not the market value on the day you received it.

When to consult a chartered accountant

The 30% flat rate sounds simple, but reporting errors are surprisingly common — especially if you used multiple exchanges, did DeFi transactions, received staking rewards, traded NFTs, or held crypto across financial years. A chartered accountant familiar with VDA taxation can review your full transaction history, catch errors before filing, and represent you if a notice arrives. For anyone with more than a handful of trades per year, a 30-minute consultation costs far less than the penalty for a filing error.