India has one of the strictest crypto tax regimes in the world. Since April 2022, profits from digital assets are hit with a flat 30% tax rate, and there’s a 1% TDS (tax deducted at source) on almost every trade.
With no ability to offset losses, many traders are getting crushed. Here’s the full breakdown for 2025 👇
🔎 How India Classifies Crypto
- Crypto is classified as a Virtual Digital Asset (VDA) under Indian law.
- Tax rules are governed by Section 115BBH of the Income Tax Act.
💰 The 30% Flat Tax
- Applies to all profits from crypto disposals.
- No differentiation between long-term and short-term gains.
- No exemptions or allowances.
Example:
- Buy Bitcoin at ₹1,000,000.
- Sell at ₹1,500,000.
- Profit = ₹500,000.
- Tax = ₹150,000 (30%), regardless of your income level.
💸 The 1% TDS Rule
- 1% tax deducted at source on every crypto transaction (above ₹50,000 per year for individuals).
- Applies whether you make a profit or loss.
- This has severely hurt liquidity on Indian exchanges.
🚫 Losses
- Losses from crypto cannot be offset against gains.
- Losses cannot be carried forward.
- Every profitable trade is taxed in isolation.
👉 This makes active trading very unattractive in India.
🧾 Income Tax on Crypto Earnings
- Mining → taxed as income from business/profession.
- Staking rewards → taxable as income when received.
- NFTs → classified as VDAs, taxed at 30% on sale.
🕵️ Enforcement in 2025
- Indian exchanges are required to deduct 1% TDS and report to the tax department.
- The government is monitoring offshore exchanges and wallets.
- Non-compliance risks:
- Penalties + interest
- Prosecution for deliberate evasion
🛠️ Compliance Checklist
- Track every trade (including offshore exchanges).
- Factor in 1% TDS deductions when calculating costs.
- Report gains under VDA rules in your annual return.
- Be prepared for scrutiny if trading offshore without declaring.
✅ Key Takeaways (India)
- Flat 30% tax on all crypto profits.
- 1% TDS on almost every trade.
- No loss offsets or carry-forwards 😬.
- Mining, staking, and NFTs = taxable.
- India’s rules are some of the toughest worldwide — compliance is painful.