India Cryptocurrency Tax Guide: TDS, ITR Filing & 30% Tax Rules

The article provides a comprehensive guide to cryptocurrency taxation in India. It explains the 30% flat tax on crypto profits, the 1% TDS on purchases, and the necessary steps for filing ITR forms (ITR-2 or ITR-3 depending on your activity).

India is rapidly heating up in the macroeconomic space. From a rapidly growing economy to a booming startup ecosystem, India is becoming a global hub for investment and innovation. Another interesting development is the increasing interest in cryptocurrencies among Indians.

As the Indian government cracks down on crypto taxation, many investors are turning to Bitcoin for an hedge against inflation and an opportunity to generate high returns.

Despite the tax implications, more and more Indians are investing in cryptocurrencies. According to a recent report by Chainalysis, India is one of the fastest-growing cryptocurrency markets in the world.

Here’s a complete guide to crypto taxation in India.

Crypto or Digital Asset (VDA) Reporting

The Union Budget 2022 introduced taxation rules for cryptocurrency in India with effect from 1 April 2022. As per the new rules, all cryptocurrencies will be taxed at a flat rate of 30 percent, and a 1 percent tax will be deducted at source (TDS) on all crypto transactions above Rs 50,000. The new norms also introduced a 30 percent tax on the profit from the transfer of cryptocurrency, which will be applied in addition to the 30 percent tax on income and the 1 percent TDS.

The government also clarified that no further tax will be levied when an individual encashes cryptocurrency received in airdrop form, and it will be taxed at the applicable slab rates on receipt and 30 percent when sold later.

The new crypto tax structure in India is as follows:

Tax structure on cryptos

Cryptocurrency Buying: 1 per cent TDS

30 per cent tax on profits booked on crypto

30% tax in crypto to crypto trading

No tax on holding cryptos

No tax when one sends crypto from one wallet to another

Airdrops: Slab rate tax on receipt of crypto, 30% tax on selling it later

On donating crypto: 30 per cent tax

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