In recent years India has changed a lot in Crypto tax rules.The government has set clear rules and to avoid legal trouble crypto traders and investors must follow them. This article explains how cryptocurrency is taxed in India, important rules to know, and tips to stay compliant.
Official Status of Cryptocurrency in India
Cryptocurrencies are now valid in India, but not considered as an official currency.
Bitcoin, Ethereum, and NFTs treat digital assets and taxable investments.The Reserve Bank of India (RBI) does not control cryptocurrencies directly, but the government oversees their trading and taxation.
Structure of Taxation for cryptocurrency in india
The Indian government introduced clear taxation rules for cryptocurrency in the 2022 Budget. Here’s how crypto transactions are taxed:
A. 30% Tax on Crypto Gains
Under Section 115BBH of the Income Tax Act Any profit from selling or transferring cryptocurrencies in India is taxed at a flat 30% rate. Except for the purchase price of the cryptocurrency no deductions are allowed. Additionally, any losses from crypto transactions cannot be adjusted against other income or carried forward to future years,without any relief for past losses traders must pay tax on profits.
B. 1% TDS on Crypto Transactions
In a financial year 1% TDS (Tax Deducted at Source) is applied to crypto transactions that exceed ₹50,000 (or ₹10,000 for certain taxpayers).It is the buyer’s responsibility to deduct the TDS and file Form 26QE or 26Q as required in P2P transactions. Still, the deducted TDS can be claimed as a refund or adjusted when filing Income Tax Returns (ITR).
C. Tax on Gifts and Airdrops
As a gift or airdrop if you receive cryptocurrency, it is taxed under “Income from Other Sources” based on your regular income tax slab. It is not taxable, if the gift is from a close relative or qualifies for specific exemptions.
D. GST on Crypto Transactions
The government is considering applying Goods and Services Tax (GST) to cryptocurrency trading platforms and transactions. Currently, some exchanges have already started charging 18% GST on trading fees.
E. Dues for Late or Non-Payment of Crypto Taxes
You could face dues ranging from 50% to 200% of the tax owed If you misreport your crypto income, and in some cases, imprisonment for up to seven years. In addition, interest charges will continue to apply on any unpaid tax until the full amount is settled.
F. Peer-to-Peer (P2P) Transactions: Key Points for Traders
For deducting 1% TDS and depositing it with the government, in P2P transactions the buyer is responsible. If the buyer fails to do so, the seller may still be held responsible for non-compliance.Traders who do not follow the rules have faced heavy dues, because the Income Tax Department is keeping a close watch on P2P transactions
G. Brokerage Fees Across Various Crypto Exchanges in India
For cost-effective crypto trading, understanding exchange fees is important . CoinDCX charges 0.02% maker fees and 0.05% taker fees for INR-M Futures, while margin trading fees are 0.05% (maker) and 0.075% (taker). ZebPay has a Scaled pricing model, with regular users (₹0–₹5 lakh trading volume) paying 0.45%, while VIP users with higher trading volumes get reduced fees, starting from 0.18%. Delta Exchange charges fees on the trade’s total value, plus 18% GST. For example, a ₹10,000 trade incurs a ₹3 fee. Paxful applies a 0.5% fee for crypto conversions and up to 1% withdrawal fees, depending on the payment method. Binance offers maker/taker fees between 0.0120% and 0.1%, depending on trading volume. Unocoin charges a 0.2% maker fee and 0.3% taker fee, with fees varying based on payment methods. Bitcoiva has a ₹10 fee for deposits and withdrawals per transaction.
Review and compare fee structures is essential, including maker and taker fees, deposit and withdrawal charges, and any additional costs, to optimize trading strategies and minimize expenses.
By understanding these critical aspects – tax rates, TDS obligations, penalties, P2P transaction responsibilities, and exchange fees – crypto traders and investors in India can navigate the regulatory landscape more effectively and ensure compliance
Crypto Trader Fined ₹78,000 on ₹1,500 Profit – A Shocking Tax Penalty Case in India
A crypto trader sold cryptocurrency worth ₹98,500 through P2P transactions for ₹1,00,000 in 2022, making a small profit of just ₹1,500.Via a centralized exchange the full amount was deposited into his bank account . Recently, he received a notice from the Income Tax Department regarding his ₹1,00,000 deposit. After providing proof of the trade and transaction records from the exchange, tax officials imposed a fine of 78% (₹78,000) on his ₹1,500 profit, highlighting the strict taxation policies on crypto transactions in India.
