Crypto Tax Rate India Capital Gains: Your 2024 Guide to Taxation Rules

Understanding Crypto Capital Gains Tax in India

India’s cryptocurrency taxation framework, introduced in the 2022 Union Budget, has transformed how investors report digital asset profits. With crypto capital gains taxed at rates up to 30%, understanding these rules is critical for compliance. This guide breaks down India’s crypto tax structure, calculation methods, and filing procedures to help you navigate your obligations confidently.

How Cryptocurrency Capital Gains Are Taxed in India

The Income Tax Act treats cryptocurrencies as virtual digital assets (VDAs), subjecting capital gains to specific slabs:

• Short-Term Capital Gains (STCG): Applies to assets held for less than 36 months. Gains are added to your total income and taxed at your applicable income tax slab (up to 30%).
• Long-Term Capital Gains (LTCG): For assets held over 36 months. Taxed at a flat 20% rate after indexation benefits.

All crypto transactions attract a 1% Tax Deducted at Source (TDS) under Section 194S, regardless of holding period.

Step-by-Step Calculation of Crypto Capital Gains

Accurately compute your tax liability with this method:

1. Determine Holding Period: Track purchase and sale dates to classify as STCG or LTCG.
2. Calculate Sale Value: Total proceeds from crypto disposal (INR).
3. Deduct Cost Basis: Subtract original purchase cost plus allowable expenses (transaction fees, gas costs).
4. Apply Indexation (LTCG Only): Adjust purchase cost using CII (Cost Inflation Index) to account for inflation.
5. Compute Tax: STCG: Add to income, apply slab rate. LTCG: Apply 20% on indexed gains.

Example: You bought ₹1,00,000 Bitcoin in Jan 2020 and sold for ₹5,00,000 in Feb 2024 (holding >36 months). After indexation, adjusted cost is ₹1,30,000. LTCG = ₹3,70,000. Tax @20% = ₹74,000.

Key Compliance Requirements for Crypto Investors

• Mandatory Disclosure: Report all crypto gains in ITR-2 or ITR-3 under “Income from Capital Gains.”
• TDS Tracking: Claim credit for 1% TDS deducted by exchanges during trades.
• Loss Restrictions: Crypto capital losses can’t offset other income types. STCG losses offset crypto STCG only; LTCG losses offset crypto LTCG only.
• Gift Taxation: Receiving crypto as a gift incurs tax based on fair market value.

Filing Crypto Taxes: Practical Steps

1. Maintain records of all transactions (dates, amounts, wallet addresses).
2. Use crypto tax software like Koinly or CoinTracker for automated calculations.
3. Report gains in Schedule VDA of your income tax return.
4. Pay advance tax if liability exceeds ₹10,000 in a financial year.
5. Retain documents for 6 years post-assessment.

Frequently Asked Questions (FAQs)

What is the tax rate for short-term crypto capital gains?

Short-term gains (holding <36 months) are taxed at your income slab rate—ranging from 5% to 30% based on total annual income. No deductions apply except brokerage costs.

How is long-term crypto capital gains tax calculated?

Gains from holdings exceeding 36 months face a 20% tax after indexation. Indexation adjusts purchase costs for inflation using government-notified CII values, reducing taxable gains.

Can I deduct trading losses against crypto profits?

Yes, but with restrictions. Short-term losses offset short-term crypto gains only. Long-term losses offset long-term crypto gains. Unabsorbed losses carry forward for 8 assessment years.

Is there a tax-free threshold for crypto gains?

No. Unlike equity investments, crypto has no ₹1 lakh LTCG exemption. All gains—even under ₹10,000—are taxable. However, basic income tax exemption limits (₹2.5 lakh) apply to STCG if included in total income.

How do I report crypto-to-crypto trades?

Every crypto swap (e.g., ETH to USDT) is a taxable event. Calculate gains in INR at transaction time using exchange rates. Report each trade separately in Schedule VDA with fair market values.

What penalties apply for non-compliance?

Failure to report attracts 50% penalty on tax due plus monthly interest (1%). Wilful evasion may lead to prosecution under Section 276C(2) with potential imprisonment.

Consult a chartered accountant specializing in crypto taxes for personalized advice. Stay updated via Income Tax Department notifications as regulations evolve.