India identified cryptocurrency as a Virtual Digital Assets and clarified the taxation rules for transactions involving crypto. However, the rules are still very complex and a dedicated taxation system for crypto has not been introduced. Crypto tax in India is still under capital gains and income tax rates, although the clarifications have solved the issue of painful loopholes and uncertainties to an extent.
Do you have to pay crypto tax in India?
Yes, crypto is taxed as capital gains and as income, depending upon the case by case basis. The nature of transaction determined how it will be treated.
When do you have to pay tax on crypto in India?
Whenever any gains are made from crypto or you are getting paid in crypto, it will be taxable in India.
What crypto transactions are taxable in India?
AS CAPITAL GAINS
- Selling Crypto
- Spending Crypto
- Swapping Crypto
AS INCOME
- Getting paid in crypto
- Staking and Mining
- Receiving gifts over INR 50,000
What are the Crypto Tax Rates in India?
AS CAPITAL GAIN
On the transactions that treat crypto gains as capital gains, a flat rate of 30% and 1% TDS is levied as taxes in India.
AS INCOME
| EXISTING TAX REGIME | NEW TAX REGIME | ||
| INCOME SLAB | TAX RATE | INCOME SLAB | TAX RATE |
| Up to INR 250,000 | 0% | Up to INR 250,000 | 0% |
| INR 250,001 – INR 500,000 | 5% above INR 250,000 | INR 250,001 – INR 500,000 | 5% above INR 250,000 |
| INR 500,001 – INR 1,000,000 | INR 12,500 + 20% above INR 500,000 | INR 5,00001 – INR 750,000 | INR 12,500 + 10% above INR 500,000 |
| Above INR 1,000,000 | INR 112,500 + 30% above INR 1,000,000 | INR 750,001 – INR 1,000,000 | INR 37,500 + 15% above INR 750,000 |
| INR 1,000,001 – INR 1,250,000 | INR 75,000 + 20% above INR 1.000,000 | ||
India Income Tax Brackets (2023)
| EXISTING TAX REGIME | NEW TAX REGIME | ||
| INCOME SLAB | TAX RATE | INCOME SLAB | TAX RATE |
| Up to INR 250,000 | 0% | Up to INR 250,000 | 0% |
| INR 250,001 – INR 500,000 | 5% above INR 250,000 | INR 250,001 – INR 500,000 | 5% above INR 250,000 |
| INR 500,001 – INR 1,000,000 | INR 12,500 + 20% above INR 500,000 | INR 5,00001 – INR 750,000 | INR 12,500 + 10% above INR 500,000 |
| Above INR 1,000,000 | INR 112,500 + 30% above INR 1,000,000 | INR 750,001 – INR 1,000,000 | INR 37,500 + 15% above INR 750,000 |
| INR 1,000,001 – INR 1,250,000 | INR 75,000 + 20% above INR 1.000,000 | ||
India Short Term Capital Gain Tax Rates (2023)
| Tax Type | Condition | Tax Applicable |
| Short-Term capital gains tax | When securities transaction tax is not applicable | The STCGT is added to the ITR of the taxpayer and the individual is taxed as per his income tax slab |
| Short-Term capital gains tax | When securities transaction tax is applicable | 15% |
India Long Term Capital Gain Tax Rates (2023)
| Tax Type | Condition | Tax Applicable |
| Long-term capital gains tax | Except on the sale of equity-oriented fund units/ equity shares | 20% |
| Long-term capital gains tax | On the sale of equity-oriented fund units/ equity shares | 10% over and above Rs.1,00,000 |
How is Tax Calculated on Cryptocurrency in India?
Crypto tax in India can be levied based upon two categories: capital gains tax and income tax.
Crypto is taxed as income tax whenever you are getting paid in crypto or staking crypto. In this case, the tax rates are determined according to your total income and whichever bracket you fall in.
Capital Gain tax rates are levied when you sell crypto, trade crypto or you spend in crypto. In this case, a flat rate of 30% along with 1% is levied on crypto gains. Now, in order to determine the values of your capital gain, you need to calculate the values at which you acquired the asset and at the value you sold it. There are two ways to go about this: First in First out (FIFO) and Average Costs Based (ACB).
According to FIFO Method, you sell your oldest acquired coin first and cost is calculated according to the respective prices at which the coin was bought. Whereas, in ACB, time of buying doesnt matter and average cost is taken into account.
Let’s take an example,
Say you bought 2 BTC for INR 20,000 in 2020 and 4 BTC for INR 60,000 in 2021. Then you sold 4 BTC in 2022 for INR 1,00,000:
- FIFO METHOD
You sell 2 BTC from 2020 and 2 BTC from 2021. So cost price is:
= 20,000 + (2/4)*60,000
= INR 50,000
Profit = 1,00,000 – 50,000
= INR 50,000
Here, taxes are levied on INR 50,000 .
- ACB METHOD:
All coins are of the same denomination. Therefore, cost price for one coin:
= (20,000 + 60,000)/6
= INR 13,333
So, cost price of 4 coins:
= INR 53,333
Profit = 1,00,000 – 53,333
= INR 46,666
Here, taxes are levied on INR 46,666.
Is there any Crypto Tax Free in India?
Buying crypto, transferring crypto between wallets, holding crypto and receiving a gift that is worth less than INR 50,000 is not taxable in India.
Crypto Tax in India – FAQs
Do you have to pay tax when you buy crypto in India?
No, you don’t have to pay tax when you buy crypto in India.
Do you have to pay tax when you sell crypto in India?
Yes, you have to pay tax when you sell crypto in India.
Do you have to pay tax when transferring crypto in India?
No, you don’t have to pay tax when transferring crypto in India.
Do you have to pay tax when spending crypto in India?
Yes, you have to pay tax when spending crypto in India.
Is swapping crypto taxable?
Yes, swapping crypto is taxable in India.
How do I avoid capital gains tax on crypto in India?
DEX (Decentralised Exchanges) might help in avoiding taxes.
Market Research Intern, Octaloop
Maitreyee takes a keen interest in financial technologies and their potential to transform lives at the grassroots. Put together with her penchant for Economic Research, she brings tonnes of academic and actionable insight into our products. Maitreyee is contributing at Binamite as a Market Research Intern, and when she's not doing that, you can find her exploring the city or buried in a book.