Crypto Tax India: What You Owe, How to File, and What to Avoid

When you buy, sell, or trade cryptocurrency, digital assets like Bitcoin or Ethereum that are recorded on a blockchain and used for transactions or investments. Also known as digital currency, it is treated as property by the Indian government, not money. In India, every trade, swap, or sale triggers a taxable event. Since April 2022, the government has imposed a flat 30% tax on crypto capital gains, the profit you make when you sell or exchange cryptocurrency for more than you paid. Unlike stocks, you can’t offset losses against other income. If you lose ₹50,000 on one coin and make ₹70,000 on another, you still pay tax on the full ₹70,000. No deductions. No carry-forwards. Just 30% of your profit, plus 4% cess.

Then there’s crypto income tax, the tax you owe on earnings from staking, mining, airdrops, or rewards. This is treated as ordinary income and taxed at your personal slab rate. If you get 0.5 ETH from a staking reward worth ₹2 lakh, that’s ₹2 lakh added to your taxable income. Even if you don’t sell it. The government tracks this through exchange data, KYC records, and blockchain analysis tools. And yes — they’re watching. The Income Tax Department has been demanding transaction histories from Indian exchanges like WazirX and CoinSwitch since 2023. If you didn’t report, you’re at risk.

What about gifts? If you receive crypto as a gift from someone who isn’t a family member, it’s taxable at fair market value. And if you send crypto to someone else? That’s a disposal — taxable event. Even swapping one coin for another counts. Buying Bitcoin with Ethereum? Taxable. Selling Ethereum for INR? Taxable. Using crypto to buy a laptop? Also taxable. There’s no exemption for small trades. The ₹50,000 threshold for gifts doesn’t apply to crypto. Every move has a tax consequence.

Reporting is simple in theory but messy in practice. You need to track every transaction: date, amount bought, price paid, amount sold, price sold, and platform. Many people use spreadsheets. Others use tools like Koinly or CoinTracker — but you still need to manually verify the data. The tax form is ITR-3 or ITR-4, depending on whether you’re a trader or investor. You’ll declare gains under ‘Income from Other Sources.’ No auto-fill. No pre-filled forms. You do the math yourself.

And don’t fall for the myth that using a foreign exchange lets you dodge taxes. If you’re an Indian resident, your global crypto income is taxable. The government doesn’t need to see your Binance account — they’ll ask for your bank statements. If you deposited ₹10 lakh to Binance and withdrew ₹15 lakh, they’ll notice. And they’ll ask why.

The rules are strict, but they’re clear. No gray area. No loopholes. Just 30% on every gain, no matter how small. The key isn’t finding ways to avoid tax — it’s tracking your trades so you don’t get hit with penalties, interest, or worse. The next audit might not be a letter. It could be a freeze on your bank account. Stay ahead. Know what you owe. And file before the deadline.

Below, you’ll find real-world breakdowns of how crypto taxes work in India — from airdrops to swaps, from staking rewards to failed projects that left people with taxable gains and zero cash to pay them.