Crypto Tax Rate in India: Capital Gains Guide for 2024

Introduction: Navigating India’s Crypto Tax Landscape

With cryptocurrency adoption surging in India, understanding the tax implications is crucial for investors. Since the 2022 Union Budget, India has established clear crypto taxation rules, treating digital assets as “Virtual Digital Assets” (VDAs). This guide breaks down the crypto tax rate in India, focusing specifically on capital gains taxation. Whether you’re trading Bitcoin, Ethereum, or NFTs, knowing how short-term vs. long-term holdings are taxed, TDS requirements, and reporting protocols will help you stay compliant and optimize your tax liability.

Crypto Capital Gains Tax Structure in India

India taxes cryptocurrency profits under capital gains, with rates depending on your holding period:

• Short-Term Capital Gains (STCG): Applies if you sell crypto within 36 months of purchase. Taxed at your individual income tax slab rate (up to 30%).
• Long-Term Capital Gains (LTCG): For assets held over 36 months. Taxed at a flat 20% rate with indexation benefits (adjusting purchase price for inflation).

Example: If you bought ₹1 lakh of Bitcoin and sold it for ₹3 lakhs after 2 years (STCG), and fall in the 30% tax bracket, you’d pay ₹60,000 in tax. If sold after 4 years (LTCG), with indexation-adjusted cost of ₹1.2 lakhs, tax would be 20% of ₹1.8 lakhs = ₹36,000.

Key Crypto Tax Rules Beyond Capital Gains

• 1% TDS on Transactions: Mandatory for transfers exceeding ₹10,000 per transaction (or ₹50,000 annually for non-specified persons). Deducted by exchanges or buyers.
• Gift Tax: Receiving crypto gifts worth over ₹50,000 annually is taxable as income for the recipient.
• No Loss Offsets: Crypto losses cannot be set against other income (e.g., salary) or carried forward to future years.
• Income from Mining/Staking: Treated as “Income from Other Sources” and taxed at slab rates.

Calculating and Reporting Crypto Taxes: A Step-by-Step Guide

1. Classify Holdings: Separate assets into short-term (≤36 months) and long-term (>36 months) buckets.
2. Compute Gains:
   • STCG = Selling Price – Purchase Price + Expenses
   • LTCG = Selling Price – Indexed Cost of Acquisition
3. Apply Tax Rates: STCG at slab rates; LTCG at 20% after indexation.
4. Deduct TDS: Reduce tax liability by TDS already paid (visible in Form 26AS).
5. File ITR: Report gains in ITR-2 or ITR-3 under “Capital Gains.” Disclose all transactions regardless of exchange.

Tip: Use crypto tax software like Koinly or CoinTracker to automate calculations and generate audit trails.

Frequently Asked Questions (FAQ)

Q: What is the current crypto tax rate in India for short-term gains?
A: Short-term gains are taxed at your applicable income tax slab rate, which ranges from 5% to 30% depending on your total annual income.

Q: How does indexation reduce long-term capital gains tax?
A: Indexation adjusts your purchase price for inflation using Cost Inflation Index (CII) numbers. This lowers taxable gains—e.g., a ₹1 lakh purchase in 2020 might be adjusted to ₹1.3 lakhs in 2024, reducing the gain by ₹30,000.

Q: Do I pay tax if I transfer crypto between my own wallets?
A: Transfers between your private wallets aren’t taxed. However, if routed through an exchange, 1% TDS may apply if thresholds are crossed.

Q: Are foreign crypto exchanges exempt from Indian taxes?
A: No. Indian residents must declare global crypto income and pay taxes as per Indian laws, regardless of the exchange’s location.

Q: Can I avoid TDS by using P2P trading?
A: No. The 1% TDS rule applies to all VDA transfers, including P2P transactions. Buyers must deduct TDS if payment exceeds ₹10,000 in a single transaction.