The Brutal Rules of Indian Crypto Tax
- Flat 30% Tax: Any profit made from transferring Virtual Digital Assets (VDAs) is taxed at a flat rate of 30%, regardless of your income tax slab. With the 4% cess, the effective rate is 31.2%.
- The "No Set-Off" Rule (The most dangerous law): Unlike stock markets, you CANNOT set off losses in one crypto against profits in another. If you make a ₹1 Lakh profit on Bitcoin, and a ₹1 Lakh loss on Ethereum, your net profit is zero. But the government will still tax you ₹31,200 on the Bitcoin profit!
- 1% TDS on Sell: To track trades, the government mandates exchanges to deduct 1% TDS on the entire SELL value (not just profit). This TDS can be claimed back when you file your Income Tax Return, provided your total tax liability is lower.
- No Deductions: You cannot deduct infrastructure costs (mining rigs, electricity) or even exchange trading fees from your profit calculations. The only deduction allowed is the cost of acquisition (Buy Price).