Need to move funds before tax season hits? You can exchange BTC to USDT in seconds — just remember any gains are still taxable at India’s flat 30% rate plus 1% TDS.
Is Crypto Legal in India?
Cryptocurrencies are not legal tender, yet owning, trading and even mining them is perfectly legal under the “Virtual Digital Asset” (VDA) definition in the Income-tax Act. The Reserve Bank of India allows regulated entities to facilitate VDA transactions provided KYC/AML norms are followed.
Tax Categories for Crypto
Before diving into rates, let’s break down the three most common ways Indians interact with digital assets — because each is taxed under a different rulebook.
| Activity | When tax is triggered | How much? | Key quirks |
| Trading / Swapping | On each disposal (sell for INR, stablecoins, other crypto) | 30% on net gain + 4% cess; 1% TDS on gross value | No loss set-off, no deductions except acquisition cost |
| Staking rewards | On receipt (treated as “Income from Other Sources”) | Individual slab rate (0 – 30%) | When later sold, any gain again faces the 30% VDA tax + cess + TDS. |
| Mining rewards | Same as staking: FMV on the day you receive coins taxed at slab rate | Slab rate, then 30% on disposal | Electricity / hardware costs are not deductible. |
Good to know: From 1 Feb 2025 unreported crypto income caught in a tax raid can be hit with 60% tax plus penalties.
Reporting Requirements
The paperwork is no longer optional; since AY 2025-26 the tax office has rolled out a dedicated VDA schedule, leaving almost no room for omission or guesswork.
- Schedule VDA (ITR-2 / ITR-3) — mandatory from Assessment Year 2025-26. You must list every trade with date, cost and proceeds.
- Prefilled ITR-2 online — new portal now auto-imports TDS and AIS data, but you still have to cross-check crypto figures.
- Exchange reporting — Indian platforms must file consolidated user data; expect notices if your Form 26AS doesn’t match.
Failing to file accurately can trigger penalties of 50% – 200% of unpaid tax and, in extreme cases, imprisonment.
How to Calculate Taxes
Numbers matter more than ever — use a clear, step-by-step method so your final figure is both defensible and easy to verify if the CBDT comes knocking.
- Identify each taxable event. A “taxable event” is any disposal: sell for INR, swap for another coin, pay for goods or services.
- Find cost basis. For trades, it’s your purchase price; for staking/mining, use INR fair-market value on the day the reward hit your wallet.
- Compute gain = Sale Proceeds – Cost Basis. Losses cannot offset other crypto gains or any other income.
- Apply 30% tax, add surcharge (if income > ₹5 million) and 4% cess.
- Deduct 1% TDS already withheld by the exchange from the tax payable.
Need real-time valuations? Check the Bitcoin price today before crystallising a gain or loss.
Tips to Stay Compliant
Save yourself from costly notices by following these practical habits that seasoned crypto investors in India already treat as second nature.
- Automate record-keeping. Export CSVs from exchanges monthly and back-up on-chain data.
- Match Form 26AS. Reconcile the 1% TDS entries — discrepancies trigger “nudge” letters.
- Watch for a lower TDS. Lawmakers are debating a cut from 1% to 0.1%; until it’s gazetted, plan for the full 1%.
- Use a crypto tax tool. Schedule VDA can be generated via software; verify numbers before filing.
- Stay private, stay legal. Read “How to Stay Anonymous While Swapping Crypto” for KYC-light practices that still meet Indian AML rules.
Summary
Short on time? Start here for a crisp recap of the 2025 crypto-tax rules and what they mean for everyday traders, stakers and miners.
- Crypto is legal in India, but it’s heavily taxed.
- Profits from trading, spending or swapping any VDA face a flat 30% tax, a 1% TDS and 4% cess.
- Staking/mining rewards are income on receipt (slab rate) and taxable again on disposal.
- Schedule VDA reporting, pre-filled ITR-2 and stricter data-matching mean less room for error in 2025.
- Reforms — like the draft Income-tax Bill 2025 and a potential TDS cut — aim to simplify, but the headline 30% rate remains for now.
Stay organised, file on time and document every rupee. Compliance may feel burdensome, but penalties for skipping your crypto taxes are far worse.