Tax on crypto (VDA)

Part of Tax on investments. 5 min read. Free lesson with a short video, quiz and practice.

Indian tax law calls crypto assets, NFTs and similar tokens virtual digital assets (VDAs). Since April 2022, they have their own strict tax rules, stricter than for shares or gold.

The rules

• Flat 30% tax on gains, plus cess (and surcharge if income is high), whatever your slab and however long you held the asset.
• No deductions except the cost of buying the asset. Exchange fees, internet and other expenses cannot be subtracted.
• Losses don't count: a loss on one token cannot be set off against a gain on another, or against any other income. It cannot be carried forward either.
• 1% TDS on transfers above ₹10,000 in a year (₹50,000 for certain small traders). Indian exchanges deduct it on sales.
• Gifts of crypto are taxed in the hands of the person receiving them under the gift rules, unless they come from a relative.

A worked example

Dev makes a gain of ₹50,000 on Token A and a loss of ₹30,000 on Token B in the same year. His net result is ₹20,000, but the tax law ignores the loss.

• Tax = 30% × ₹50,000 = ₹15,000.
• Plus 4% cess = ₹15,600.

That is 78% of his actual net profit of ₹20,000. If his slab is 5%, he still pays 30%.

Reporting

Crypto gains go in a separate schedule (Schedule VDA) in ITR-2 or ITR-3, with each trade's buy date, sale date, cost and sale value. Exchanges report your trades to the tax department, so they appear in your AIS. If you trade often enough for it to be a business, the 30% rule still applies.

Beyond tax

Crypto is not regulated as a security in India, and prices can swing sharply. Investor protections that apply to shares and mutual funds do not apply here. Tryvest's virtual coins are practice money in the app only: they are not crypto and can never be bought or sold for real money.