TL;DR
- Gains on virtual digital assets are taxed at a flat 30%, plus surcharge and a 4% cess, so the realistic floor is 31.2%.
- A separate 1% TDS is deducted from the sale itself once you pass Rs 50,000 in a financial year, or Rs 10,000 if you sit outside the specified-person definition.
- Only the cost of acquisition can be subtracted. Exchange fees, transfer charges and every other expense are not deductible.
- A Rs 2,00,000 gain and a Rs 2,00,000 loss in the same year still leaves you taxed on the whole gain. Losses do not offset, and they do not carry forward.
Short version: the rate is the easy part. The bill grows because of everything the law will not let you subtract.
Ask what tax you pay on crypto in India and you get one number back: 30%. That number is correct and it is also the least useful thing you can know, because two people with identical profits routinely end up paying very different amounts. The rate is fixed. What moves is the base it applies to.
India treats crypto, tokens and NFTs as virtual digital assets, taxes any gain on transfer at a flat rate with no slab relief, takes a further 1% off the transaction itself, and refuses almost every deduction you would expect to be allowed. None of those four rules is complicated. Together they produce a bill most people have not budgeted for.
Start with your records, not the rate
Arrive at filing season without a clean transaction history and everything after this gets expensive. Because only the purchase price comes off, every rupee of cost you cannot evidence turns into taxable profit. People who traded across three platforms and a wallet, then closed one of the accounts, end up guessing. Guessing upward is expensive. Guessing downward is worse.
So what your platform hands back to you matters more than it looks. Sell USDT in India through CoinYatra and every movement lands in a double-entry internal ledger that can show balances in rupees or dollars, which is close to the shape of record the tax return asks you to reconstruct anyway.
Keep the raw exports, not just the summary. A summary you cannot trace back to individual trades is not evidence, it is an assertion.
What the 30% actually is
Gains from transferring a virtual digital asset are taxed under section 115BBH of the Income-tax Act at 30%, plus any surcharge that applies to your income level and a 4% health and education cess on the tax. For someone below the surcharge thresholds that lands at 31.2%, not 30%. The Income Tax Department publishes the Act itself, and it is worth reading section 115BBH once rather than relying on summaries, this one included.
There is no lower rate for holding longer. There is no slab. Someone whose total income sits inside the basic exemption limit still pays 30% on a crypto gain, which is the part that surprises students and first-time traders most often.
The 1% that comes off before you see the money
Separately from the tax on profit, section 194S puts a 1% TDS on the transfer itself. It is deducted at source, it applies whether or not you made money on the trade, and it is not an extra tax. It is a prepayment, credited against what you eventually owe and refundable if you overpaid.
| Who you are | TDS threshold in a financial year | Rate once crossed |
|---|---|---|
| Specified person, which covers most individuals and Hindu Undivided Families without substantial business or professional income | Rs 50,000 | 1% of the transfer value |
| Everyone else, including those crossing the business or professional income tests | Rs 10,000 | 1% of the transfer value |
These thresholds are cumulative across the year rather than per trade. Someone making forty small sales reaches them just as surely as someone making one large one, and after that every disposal is shaved by 1% on the way out.
Three rules that cost more than the rate
This is where the gap between 30% and what people actually pay opens up.
- Nothing but the purchase price is deductible. Not trading fees, not withdrawal charges, not software, not the cost of the hardware you mined on. Two traders with the same net outcome pay different tax if one of them paid more in fees, because those fees are invisible to the calculation.
- Losses do not offset gains. Not against other income, and not against gains on other virtual digital assets either. Lose heavily on one token and profit on another in the same year, and you are taxed on the profitable one in full.
- Losses do not carry forward. A bad year buys you nothing in a good one. The slate is wiped, and it is wiped against you.
Take a year with a Rs 2,00,000 gain on one asset and a Rs 2,00,000 loss on another. On any ordinary reading you made nothing. The tax is still about Rs 62,400, because the gain is counted and the loss is not. Put the three rules together and the effective rate on a volatile year runs far above 31.2% of what you actually cleared. That is not a loophole anyone has missed. It is the design.
Who else is looking at these numbers
Reporting is not only your side of the arrangement. Since March 2023, platforms dealing in virtual digital assets are reporting entities under the Prevention of Money Laundering Act and must register with the Financial Intelligence Unit of India, which brings mandatory identity verification, record retention and transaction reporting with it.
The practical consequence for an ordinary trader is simple. The trail exists whether or not you reconstruct it, so the version you file should match the version already recorded. Declaring crypto is reported in a dedicated schedule on the return, alongside the rest of your income, and the numbers there are checkable.
Budgeting for it
Treat the tax as a cost of the trade rather than a surprise at the end of the year. Set aside roughly a third of every realised gain as it happens, keep the exports, and reconcile quarterly rather than in July. If you are running trading alongside freelance or contract income, the same discipline that makes the rest of that work applies here too, and our guide to smart budgeting for freelancers and side hustlers covers the mechanics of putting money aside before you spend it.
The 30% headline will keep being quoted because it is short. The number that matters to you is the one after the cess, after the fees you cannot deduct, and after the losses you are not allowed to count. Work that one out first, and nothing in July is a shock.
