India’s crypto tax rules aren’t just strict-they’re unlike anything else in the world. If you’re trading, staking, or even receiving airdrops, the government is watching. And if you don’t report it right, the penalties could hit harder than a market crash. There’s no warning. No grace period. Just a 30% tax on every profit, a 1% TDS on every trade, and an 18% GST on platform fees-all enforced with little room for error.
How Crypto Taxes Work in India (2026)
Since April 2022, India has taxed all cryptocurrency gains at a flat 30%. That’s not a capital gains rate. It’s not an income tax rate. It’s a crypto tax-the same rate applied to lottery winnings. There are no deductions. No loss carryforwards. If you bought Bitcoin at ₹5 lakh and sold it for ₹8 lakh, you owe ₹90,000 in taxes on the ₹3 lakh profit. Period.
And it doesn’t stop there. Every time you trade-whether on WazirX, CoinSwitch, or a peer-to-peer app-a 1% Tax Deducted at Source (TDS) is automatically taken out by the buyer. That’s right: even if you’re selling to a friend, they’re legally required to withhold 1% of the payment and send it to the government. If you forget, you’re not just out the money-you’re on the hook for the full amount.
Since July 7, 2025, even platform services now carry an 18% GST. That includes trading fees, withdrawal charges, staking rewards, wallet management, and even KYC verification. If you use a crypto exchange, you’re paying GST on top of your 30% tax and the 1% TDS. No other country combines these three layers so aggressively.
Who Has to Report? And How?
If you made any profit from crypto in the 2024-25 financial year, you must report it. That means filing either ITR-2 (for individuals with capital gains) or ITR-3 (if you’re running a crypto business). Both forms now include a dedicated section called ‘Schedule VDA’-Virtual Digital Assets. This isn’t optional. The Income Tax Department cross-references data from exchanges, bank statements, and TDS filings. Missing it isn’t an oversight. It’s a red flag.
Platforms aren’t off the hook either. All Indian crypto exchanges, even those with turnover under ₹20 lakh, must register for GST. They’re classified as OIDAR services-Online Information and Database Access or Retrieval. That means they must issue GST invoices for every service, keep transaction logs for at least six years, and report user activity to the tax authorities. If they don’t, they face fines, suspension, or worse.
What Are the Penalties?
Here’s the scary part: India hasn’t published a clear penalty chart for crypto tax evasion. But that doesn’t mean there aren’t consequences. The government uses existing income tax laws to punish non-compliance. That means:
- For not filing your ITR: up to ₹5,000 in late fees (₹10,000 if filed after December 31)
- For underreporting income: 50% of the tax evaded, plus interest at 1% per month
- For willful evasion: up to 300% of the tax amount, plus possible prosecution under Section 276C
There’s no public record of crypto-specific prosecutions yet-but that doesn’t mean they’re not happening. The Central Board of Direct Taxes (CBDT) has been quietly auditing high-volume traders since 2024. If your bank shows regular deposits from crypto exchanges and you didn’t report them, you’re already on their radar.
And don’t think offshore exchanges will save you. The government is actively pushing for international data sharing under the Common Reporting Standard (CRS). If you used Binance, Kraken, or Bybit and withdrew to an Indian bank account, the RBI and CBDT can trace it. They’ve been demanding transaction logs from foreign platforms since 2025.
Why Losses Don’t Matter
One of the harshest parts of India’s crypto tax system? You can’t offset losses. If you lost ₹2 lakh on Ethereum but made ₹5 lakh on Solana, you still pay 30% on the ₹5 lakh. The ₹2 lakh loss? Gone. No carryforward. No deduction. Not even against other crypto gains.
This isn’t how capital gains work anywhere else. In the U.S., you can net losses against gains. In the UK, you have an annual exemption. In India, you’re treated like a gambler. The government’s logic? Cryptocurrency is speculative. So tax it like a lottery.
But here’s the real problem: this structure punishes long-term investors and discourages honest reporting. Many traders now just cash out quietly through P2P apps or use crypto-to-crypto swaps to avoid triggering TDS. It’s not legal-but it’s happening.
What’s Changing in 2026?
The government knows the system is flawed. In August 2025, the CBDT sent out detailed questionnaires to 20+ Indian crypto exchanges. They asked: Is the 1% TDS too heavy? Does the 30% tax kill liquidity? Are offshore platforms gaining unfair advantage? Are we missing more revenue than we’re collecting?
The answers aren’t public-but the fact they’re asking means change is coming. Experts believe a comprehensive crypto law might replace the current tax-only approach by late 2026. That could mean regulated exchanges, clearer licensing, and possibly even loss offset rules.
Until then, the rules stay brutal. The GST on services is here to stay. The TDS is mandatory. The 30% tax isn’t going anywhere. And enforcement? It’s getting smarter.
What You Should Do Now
If you’re holding or trading crypto in India, here’s what you need to do before March 31, 2026:
- Track every transaction: buys, sells, swaps, staking rewards, airdrops.
- Calculate your gains using cost price (in INR) and sale price (in INR). Don’t use USD or other currencies.
- Check your exchange statements for TDS deductions-those must be reflected in your ITR.
- File ITR-2 or ITR-3 with Schedule VDA completed. Even if you had no profit, report zero income.
- Keep records for at least six years: wallet addresses, transaction IDs, exchange receipts, GST invoices.
Don’t wait for a notice. Don’t hope the government forgets. The digital trail is real. The audits are real. And the penalties? They’re worse than you think.
What About Mining and Airdrops?
Yes, they’re taxed too. If you mine Bitcoin or receive an airdrop, the government treats it as income. The value is calculated at the fair market price on the day you received it-using Rule 11UA of the Income Tax Rules. That means if you got 0.5 ETH in an airdrop when it was worth ₹2 lakh, you owe 30% tax on ₹2 lakh. No exceptions.
And if you later sell that ETH? You pay another 30% on the gain. Double taxation? Technically, yes. The law doesn’t care. It’s still treated as income first, then as capital gain.
Is There Any Hope for Change?
Possibly. The CBDT’s review in 2025 was the first sign the system might be broken. Many traders are leaving India. Exchanges are moving operations to Dubai or Singapore. The government is losing tax revenue because people are going underground.
But until there’s a new law, the current rules stand. And right now, the message is clear: if you’re in crypto in India, you’re playing by rules written to discourage you. The only way to survive is to comply-fully, accurately, and on time.
Is crypto legal in India?
Yes, but it’s not legal tender. You can own, trade, and hold cryptocurrency, but the government doesn’t recognize it as money. It’s treated as a digital asset for tax purposes. The Supreme Court lifted the banking ban in 2020, but there’s still no clear legal framework beyond taxation.
Can I avoid crypto tax by using offshore exchanges?
No. If you withdraw crypto profits to an Indian bank account, the RBI and CBDT can trace the transaction. Foreign exchanges are being pressured to share data with Indian authorities. Even if you don’t report it, your bank deposits will trigger an audit. Avoiding tax through offshore platforms is risky and increasingly ineffective.
What happens if I don’t file my crypto taxes?
You could face penalties up to 300% of the tax evaded, plus interest at 1% per month. The Income Tax Department uses AI tools to match bank deposits with exchange data. If you’re a frequent trader, you’re already flagged. Ignoring it doesn’t make it disappear-it makes it worse.
Do I pay tax on crypto-to-crypto trades?
Yes. Every swap-Bitcoin for Ethereum, USDT for Solana-is treated as a sale. You must calculate the INR value of the asset you sold and the INR value of what you received. The difference is your taxable gain. TDS applies if the trade happens on an Indian exchange.
Can I claim losses from crypto on my tax return?
No. India does not allow crypto losses to offset gains or other income. Even if you lost ₹10 lakh on one coin and made ₹5 lakh on another, you still pay 30% tax on the ₹5 lakh. Losses are ignored by the tax system.
Is staking crypto taxable in India?
Yes. Staking rewards are taxed as income at the time you receive them, based on their fair market value in INR. If you later sell those rewards, you pay another 30% tax on any gain. GST also applies if the platform charges a staking fee.
Do I need to pay GST on crypto purchases?
No. GST applies only to platform services-not to buying or selling crypto itself. But if you pay a trading fee, withdrawal fee, or custody fee, that’s subject to 18% GST. The crypto you buy isn’t taxed under GST, but the service you used to buy it is.
Can I be prosecuted for crypto tax evasion?
Yes. Under Section 276C of the Income Tax Act, willful evasion of tax can lead to criminal prosecution, with penalties up to seven years in prison. While no crypto-specific prosecutions have been made public yet, the legal framework exists. The government has the tools to trace and punish.
Roshmi Chatterjee
January 22, 2026 AT 10:30Just filed my ITR-2 with Schedule VDA last week. Took me 3 days to reconcile every swap, airdrop, and staking reward. The 1% TDS on every trade? Brutal. But at least I know I’m clean. No sleepless nights worrying about a notice.
Pro tip: Use a spreadsheet. Don’t trust exchange summaries-they mess up the cost basis sometimes.
Andy Marsland
January 23, 2026 AT 05:42Let’s be real-this isn’t taxation, it’s financial persecution. The 30% rate on crypto gains is straight-up punitive. No other asset class gets treated like this. You can’t even offset losses? That’s not economics, that’s authoritarianism disguised as fiscal policy. The government doesn’t want you to succeed-they want you to quit.
And don’t get me started on the GST on wallet services. Who the hell thought that up? A bureaucrat who’s never held a private key?
Meanwhile, the US lets you net losses, the EU has exemptions, Singapore has clear rules-and India? We’re treating crypto like it’s illegal gambling. It’s embarrassing.
Nadia Silva
January 24, 2026 AT 04:32Of course Indians complain. But if you’re trading crypto, you’re speculating. And speculation deserves to be taxed like lottery winnings. This isn’t a ‘fairness’ issue-it’s a moral one. People who think they’re ‘investing’ in Dogecoin are delusional. The tax code reflects reality: crypto is a gamble. Tax it like one.
Also, if you’re using offshore exchanges to dodge TDS, you’re not clever-you’re a tax cheat. And cheaters belong in jail, not in Reddit threads.
Deepu Verma
January 25, 2026 AT 15:21Hey, I know it’s rough-but don’t give up. I used to hate tracking every transaction too. Then I started using Koinly. It auto-syncs with WazirX and CoinSwitch. Saved me 20+ hours.
And yes, the 30% hurts. But if you report clean, you’re already ahead of 80% of traders. No audits. No stress. Just peace of mind.
You got this. One transaction at a time.
MICHELLE REICHARD
January 27, 2026 AT 05:28Wow. Someone actually did their taxes? How quaint. I assume you also floss daily and pay your credit card on time.
Let me guess-you think the government is ‘helping’ you by taking 30% of your gains? Sweetheart, they’re not helping. They’re extracting. And the 1% TDS? That’s not a tax-it’s a surveillance tool. Every trade you make is logged, tagged, and sold to data brokers.
And you’re proud of complying? You’re not a taxpayer. You’re a data point.
Julene Soria Marqués
January 28, 2026 AT 04:48So you’re telling me if I buy Bitcoin for ₹5L and sell for ₹8L, I owe ₹90K, but if I lose ₹2L on Ethereum, I get nothing back? That’s not a tax system. That’s a trap.
And yet people still trade? I don’t get it. You’re literally paying the government to gamble for them. It’s like paying rent to play roulette.
Also, why is GST on wallet fees a thing? Who even uses a wallet service that charges fees? It’s not like I’m getting a receipt for my private key.
Abdulahi Oluwasegun Fagbayi
January 30, 2026 AT 00:57India’s crypto tax is a mirror. It shows what the state believes about its people: that we are all cheaters until proven otherwise.
But here’s the thing-we don’t need permission to own digital money. The blockchain doesn’t care about your ITR form.
They can tax the withdrawal. They can track the bank. But they can’t touch the private key.
And that’s where the real power lies.
Keep your records. Pay what you owe. But never forget-you’re not their subject. You’re a node in a network they can’t control.
Mathew Finch
January 31, 2026 AT 12:11Everyone here acts like this is unique. Try living in France. They tax crypto at 30% PLUS 17.2% social charges. Plus capital gains tax. Plus VAT on services. Plus mandatory reporting to the EU. You’re lucky India doesn’t have a 50% wealth tax on crypto holdings.
Stop acting like you’re being persecuted. You’re just being taxed like every other modern economy-with a little more transparency.
And if you’re complaining about TDS, you probably didn’t even read the fine print. It’s not new. It’s been in place for stocks since 1961. Crypto just got lumped in.
Anna Topping
February 2, 2026 AT 00:57I used to think crypto was freedom. Now I just see it as a tax liability with extra steps.
My friend bought 1 BTC in 2021. Sold half in 2023. Paid 30% tax. Then sold the rest in 2025. Paid another 30%. Then got hit with GST on the exchange fee. Then got audited because the bank flagged the deposit.
She’s done. Sold everything. Bought gold. Moved to Portugal.
India doesn’t want crypto investors. It wants crypto tax collectors.
Jeffrey Dufoe
February 3, 2026 AT 07:06Just wanted to say thanks to Roshmi for the spreadsheet tip. I used Google Sheets with columns for date, exchange, type, amount in INR, and TDS deducted. Took me a weekend but now I’ve got it all tracked.
Also, I didn’t know staking rewards counted as income. Learned that the hard way last year. Now I report them even if I re-stake.
Small steps, right?