How crypto is taxed in India.

How much tax do you pay on crypto in India?

Gains on the transfer of virtual digital assets are taxed at a flat 30%, plus applicable surcharge and 4% health and education cess. The rate does not change with your income slab, and it does not change with how long you held the asset.

The charge sits in section 115BBH of the Income-tax Act, introduced by the Finance Act 2022. Because it is a special rate, the gain is not added to your slab income for rate purposes — a person otherwise in the 5% slab still pays 30% on a VDA gain.

What counts as a virtual digital asset?

Broadly, any cryptocurrency, token or NFT: information, code, number or token generated cryptographically, providing a digital representation of value that can be transferred, stored or traded. Bitcoin, Ether and stablecoins fall inside it. Derivatives settled in a virtual digital asset — the perpetual contracts our strategies trade — are less clear-cut, and that question is dealt with separately below.

The statutory definition is in section 2(47A). Indian currency and foreign currency are excluded, and the Central Government can notify specific exclusions and inclusions. Where an instrument is a derivative settled in a VDA, treat the position as VDA-related and take advice rather than assuming equity-derivative treatment applies.

What can you deduct from a crypto gain?

Only the cost of acquisition. Exchange trading fees, funding costs, transfer fees, subscription costs, advisory or management fees, internet and electricity are all non-deductible against VDA income, even though they are real costs of earning it.

This is the part that surprises people most, and it materially changes the arithmetic on an actively traded account: the gross gain is taxed, not the net-of-costs gain. Budget for tax on a larger figure than your account statement shows as profit.

Can you set off crypto losses in India?

No. A loss on a virtual digital asset cannot be set off against any other income, and per CBDT clarification it cannot be set off against gains on another virtual digital asset either. It also cannot be carried forward to a later year.

The practical consequence is severe and worth stating plainly: an account that makes ₹5,00,000 on one position and loses ₹5,00,000 on another in the same year has made nothing, but can still owe 30% on the ₹5,00,000 gain. This is a reason to size positions conservatively, and a reason the AlgoGains profit share is charged on realised profit rather than on assets under management.

How does the 1% TDS on crypto work?

Section 194S requires 1% tax to be deducted at source on the consideration for transferring a virtual digital asset. On an Indian exchange the exchange normally deducts and deposits it. It is a credit, not an extra tax — it is set against your final liability when you file.

Two thresholds apply — ₹50,000 a year for a specified person and ₹10,000 otherwise — and the deduction is on the transfer value rather than the gain, so a losing trade attracts it too. On peer-to-peer or foreign-platform transfers the obligation to deduct can fall on you as the buyer.

How are crypto futures and perpetual contracts taxed?

Treatment of VDA derivatives is less settled than treatment of spot holdings. Positions settled in a virtual digital asset are commonly treated within the VDA regime at 30%, though some advisers argue for business-income treatment depending on the facts. Take advice on your own position before you file.

We flag this rather than smoothing over it because AlgoGains strategies trade perpetual contracts on Delta Exchange, so it is directly relevant to a client account. Where the treatment is genuinely uncertain we would rather you hear that from us and ask your accountant than be told a clean answer that may not survive scrutiny.

Do you have to pay advance tax on crypto gains?

Yes, if your total tax liability for the year exceeds ₹10,000. The 1% TDS covers roughly a thirtieth of a 30% charge, so the rest is due in instalments during the year — 15% of the estimate by 15 June, 45% by 15 September, 75% by 15 December and all of it by 15 March. Shortfalls attract interest under sections 234B and 234C.

This is awkward for crypto specifically, because gains are lumpy and you cannot forecast in June what a volatile asset will have done by March. The practical habit is to set the tax aside when a gain is realised rather than when the return is due.

Is moving crypto between your own accounts taxable?

No. Transferring a virtual digital asset between wallets or exchanges you own is not a transfer for the purposes of section 194S, so there is no 1% TDS and no taxable event. Only a disposal — a sale, a swap, or spending the asset — triggers the charge.

Keep the records anyway. A self-transfer is not taxable but it does move the acquisition history to a different venue, and Schedule VDA still wants the original cost and date when you eventually dispose of it.

Where do you report crypto in your tax return?

In Schedule VDA of the income tax return, which requires transaction-level detail: date of acquisition, date of transfer, cost of acquisition and consideration received for each transfer. ITR-2 or ITR-3 depending on your other income.

Schedule VDA is why record-keeping matters more here than for most asset classes — you are reporting per transfer, not a single annual figure. Keep the exchange statements for every financial year; you need the acquisition side as much as the disposal side.

What about gifts, airdrops and mining?

A virtual digital asset received as a gift is taxable in the recipient's hands under section 56(2)(x), subject to the usual exemptions for relatives and specified occasions. Airdrops and mining rewards are generally taxed on receipt, with mining infrastructure costs not deductible.

Cost of acquisition for a mined asset is treated as nil, so effectively the whole disposal value is the gain. These edge cases are where positions differ most between advisers — this is a general summary, not a determination of your case.

Is GST charged on crypto trading?

GST at 18% generally applies to the service fee an exchange charges, not to the value of the asset you buy. It appears as a charge on your exchange statement and is an exchange cost, separate from income tax on your gains.

What does AlgoGains provide for your tax filing?

Statements to support your return: the trades placed on your account with dates, sizes, entries and exits, and a tax pack for the financial year for Managed clients. AlgoGains is not a tax adviser and does not file on your behalf. Tax is your responsibility as the account holder.

Because the account is yours, the Delta Exchange statement is the primary record and is available to you directly at any time. Our statements are there to make Schedule VDA workable, not to replace the exchange record.