Bitcoin sales in India are taxed at a flat 30% plus 1% TDS, regardless of profit size or holding period.
Unreported crypto income may attract a steep 60% penalty along with interest and fines.
All cryptocurrency, including Bitcoin and other crypto assets, must be disclosed in annual tax filings under Virtual Digital Asset rules.
In India, Bitcoin is considered a Virtual Digital Asset (VDA) and is taxed under special rules introduced by the government. When Bitcoin is sold, swapped for another cryptocurrency, or even used to buy something, it is treated as a taxable transaction. The income from selling Bitcoin is taxed at a flat 30% rate, which applies to all profits, no matter how long Bitcoin is held. On top of this, a 4% health and education cess is added to the tax bill. Depending on total income, additional surcharge rates may also apply.
Apart from this 30% tax, the government also charges a 1% Tax Deducted at Source (TDS) on every transaction involving the sale or swap of Bitcoin, if the value exceeds ₹10,000 in a financial year. The TDS is collected automatically by crypto exchanges at the time of the transaction. This deduction is made whether or not there is a profit. This means that even if Bitcoin is sold at a loss, the 1% TDS will still be deducted from the transaction value.
Tax is charged every time Bitcoin is sold for money, exchanged for another crypto, or used to make a purchase. Any disposal of the asset triggers a taxable event. For example, if Bitcoin is used to buy a laptop or exchanged for Ethereum, tax will still apply on the gains made since the original purchase. The gain is calculated as the difference between the sale price and the purchase price. No deductions are allowed for trading fees, exchange costs, or losses from other trades.
Losses from Bitcoin or other cryptocurrency transactions cannot be adjusted against gains from stocks, property, or other crypto assets. This means that losses in one type of crypto cannot reduce the tax owed on profits made from Bitcoin.
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The Union Budget for 2025 did not make any changes to the 30% tax rate or the 1% TDS on crypto. These rules, introduced in 2022, remain unchanged. However, there are some new developments in how the government handles non-disclosure of crypto income.
Starting from February 2025, any gains from Bitcoin or other crypto assets that are found during a tax audit and were not reported can be taxed at 60%. This higher tax rate is meant to discourage tax evasion and ensure full reporting of crypto earnings. Along with the 60% tax, there are additional surcharges and penalties. This makes hiding crypto income extremely risky.
The Central Board of Direct Taxes (CBDT) has also started a detailed investigation into unreported income from cryptocurrencies. The focus is on identifying individuals who made large gains in crypto but did not report them in their tax filings. The government is now using data analytics and transaction monitoring to track such high-risk investors.
To understand how tax is calculated, consider an example. If someone bought Bitcoin for ₹20 lakh and sold it for ₹30 lakh, the profit is ₹10 lakh. The flat 30% tax on this profit would be ₹3 lakh. Adding the 4% cess, the total tax becomes ₹3.12 lakh. Additionally, when the Bitcoin was sold, a 1% TDS of ₹30,000 would have been deducted from the ₹30 lakh transaction. This TDS is treated as advance tax and can be claimed while filing income tax returns.
However, even after deducting the TDS, the remaining ₹2.82 lakh still needs to be paid before the return is filed. This system ensures that some part of the tax is collected upfront, reducing the chance of tax evasion.
Over the past two years, crypto trading has been under much closer scrutiny by Indian authorities. The income tax department is actively investigating traders who may not have declared crypto income properly. With the introduction of higher penalties and the 60% tax on unreported crypto, the risk of being caught has increased sharply.
Crypto traders must now report all transactions carefully and on time. Any failure to do so could lead to interest charges, fines, and even imprisonment in extreme cases. The government’s efforts to clamp down on undisclosed crypto income are backed by new data collection tools, helping it track even foreign transactions.
One way to manage the tax burden is to invest through Bitcoin ETFs (Exchange-Traded Funds), which are taxed like regular stock investments. ETFs are not subject to the 1% TDS or the 30% flat rate that applies to direct crypto trades. Instead, capital gains from ETFs are taxed at lower rates—typically 15% for short-term and 10–20% for long-term gains, depending on the holding period and structure.
For those trading directly in crypto, maintaining detailed records of each transaction is essential. These records should include the purchase date, cost of acquisition, sale date, and selling price. Since no other expenses can be deducted from the profit, keeping a clear record of costs is the only way to ensure accurate tax reporting.
Some Indian investors use foreign platforms to trade crypto to avoid TDS. While TDS may not apply when trading on overseas exchanges, the 30% tax still applies to any gains made. Further, with the upcoming global Crypto-Asset Reporting Framework (CARF), even foreign crypto transactions will eventually be reported to Indian tax authorities. From 2026 onward, all countries part of the agreement will exchange crypto-related tax data with each other.
Using foreign exchanges might delay tax reporting, but it does not eliminate the requirement to pay taxes. Unreported foreign crypto holdings can attract heavy penalties once discovered.
Failing to pay the required tax on Bitcoin sales or hiding transactions can lead to serious consequences. If crypto income is found during an audit and was not declared, it may be taxed at 60% along with surcharge, interest, and penalty. Tax evasion involving large sums can result in fines up to 200% of the tax due and even imprisonment for up to seven years.
These strict rules show how seriously the Indian government treats crypto taxation. It is important to comply fully to avoid legal trouble.
Several platforms like CoinDCX, KoinX, and Koinly now offer crypto tax calculators and reporting tools. These services help traders calculate tax liability by analyzing their transaction history and generating tax-ready reports. These platforms can be linked to wallets and exchanges to automatically track trades, making tax filing easier and more accurate.
Manual calculation can be challenging, especially for those who trade frequently or across multiple platforms. Using reliable tools is becoming necessary in order to stay compliant with tax regulations.
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The Indian crypto tax system is unlikely to see major changes soon. The flat 30% tax and 1% TDS remain in place, and enforcement is becoming tighter. As more countries move toward global data sharing on crypto assets, the window for hiding gains is closing fast.
Selling Bitcoin in India today means dealing with a well-defined but strict tax system. A flat 30% tax on gains and 1% TDS on each transaction are unavoidable. With increased enforcement, audit risks, and severe penalties for non-compliance, proper tax planning and record-keeping are more important than ever. The rules are clear, and the cost of ignoring them has become too high. Staying informed, organized, and compliant is the key to trading Bitcoin safely under Indian law.