Crypto Tax India: What You Really Pay, Who It Affects, and How to Stay Legal

When you buy, sell, or trade cryptocurrency in India, you’re not just making a financial move—you’re triggering a crypto tax India, a legal obligation on digital asset gains enforced by the Income Tax Department since 2022. Also known as digital asset tax, it applies to every trade, swap, or conversion—even if you didn’t cash out to rupees. Unlike many countries that treat crypto like property, India taxes every transaction at a flat 30%, with no deductions for losses. That means if you trade BTC for ETH and then sell ETH for INR, you owe tax on both legs—even if you broke even overall.

This isn’t theoretical. In 2023, the Indian tax department started matching blockchain data with bank statements. If you sent 5 BTC to a foreign exchange and later withdrew ₹18 lakh to your savings account, they’ll know. And they’ll ask for proof. The 1% TDS (tax deducted at source) on every crypto trade since July 2022 acts as a digital trail—every exchange, even decentralized ones, must report. There’s no loophole for using foreign platforms. If you’re an Indian resident, your global crypto activity is taxable.

What’s often missed is that gifts, crypto received as a reward, referral bonus, or airdrop is treated as income. If you got 100 USDT from a referral program and sold it for ₹8,000, that’s taxable income. Even holding crypto longer than three years doesn’t get you lower rates—it’s still 30%, no matter how long you wait. And if you mine crypto? The moment you receive the coins, their market value becomes taxable income. Staking rewards? Taxable. Liquidity pool fees? Taxable. Converting stablecoins to other tokens? Also taxable. There’s no "capital gains" category—just one flat rate, no exceptions.

People think they can avoid this by using peer-to-peer platforms or non-KYC wallets. They can’t. The law doesn’t care how you trade—it cares that you’re in India. If your PAN is linked to a bank account and you’ve ever moved money in or out of crypto, you’re on their radar. The penalty for not filing? Up to 100% of the tax due, plus interest and possible prosecution.

So what’s the real path forward? Keep detailed records: date, amount, value in INR at time of trade, platform used, and purpose. Use free tools like Koinly or CoinTracker to auto-track your history. File your ITR-2 with Schedule CG, even if you lost money. Don’t wait for a notice. The ones who get audited aren’t the big traders—they’re the ones who didn’t file and got flagged by mismatched bank deposits.

Below, you’ll find real breakdowns of how Indian traders are navigating this system—what worked, what backfired, and what scams are pretending to be tax advice. No theory. No guesses. Just what’s happening on the ground.