India -- Cryptocurrency Tax Framework Regulatory Overview

India taxes cryptocurrency and other virtual digital assets (VDAs) under Section 115BBH of the Income Tax Act at a flat 30% rate on income from transfers, with no distinction between short-term and long-term gains, no loss offsets, and limited deductions (only cost of acquisition). A 1% Tax Deducted at Source (TDS) applies under Section 194S to transfers exceeding ₹50,000 (or ₹10,000 in specified cases) annually.[1][3][5]

Capital Gains Tax Rates

Gains from selling, trading, spending, or transferring VDAs (e.g., crypto-to-crypto or crypto-to-fiat) are taxed at a flat 30% as "income from other sources," not capital gains eligible for slab rates or lower long-term rates.[1][3][4][5] This applies regardless of holding period, income bracket, or transaction type; only the cost of acquisition is deductible, and no other expenses qualify.[1][4]

Income Tax on Crypto

• Transfers and trading: Flat 30% on profits.[1][3][5]
• Mining, staking, airdrops: Treated as VDA income at 30%; cost basis for mined crypto is zero, and expenses like electricity are non-deductible.[3][5]
• Gifts: Taxable at 30% if from non-relatives exceeding ₹50,000; relative gifts exempt.[3]
• Non-VDA income (e.g., salary in crypto) may fall under slab rates, but VDA-specific rules dominate.[5]

Losses from VDAs cannot be offset against any gains or income, including other VDAs.[1][3][4]

VAT/GST Treatment

Search results provide no specific guidance on GST/VAT for crypto transactions; it is not addressed as a distinct category beyond income tax rules.[1-7] Crypto is not treated as goods/services under GST in the provided sources.

Reporting Requirements

• Individuals and businesses: Report VDA income in Schedule VDA of ITR forms (e.g., ITR-2 or ITR-3); include details of transfers, TDS, and gains.[1][5][7]
• TDS credits (1%) can be claimed; track all transactions as exchanges deduct TDS on sales.[3][5]
• No specific business distinctions beyond flat 30% on transfers; business income classification does not alter VDA rates.[3][4]

Crypto-Specific Legislation

• Section 115BBH: Flat 30% tax on VDA transfer income, no offsets/deductions beyond acquisition cost.[1][5]
• Section 194S: 1% TDS on VDA transfers above thresholds, effective July 1, 2022.[3][5] Introduced in Finance Act 2022; VDAs defined to include crypto, NFTs, etc. No updates noted post-2022 in results.[1][5]

For official references:

• Income Tax Department: https://incometaxindia.gov.in (search Sections 115BBH, 194S).
• CBDT Circulars: https://www.incometax.gov.in/iec/foportal/ (TDS notifications).

Consult a tax professional for personalized advice, as rules apply per financial year (April 1–March 31).[1][5]