India Imposes Stringent Tax Regime on Cryptocurrencies with Flat 30% Rate

The Indian government has introduced a stringent tax regime for cryptocurrencies, which includes a 1% TDS on VDA transfers exceeding the prescribed threshold. The tax rate is a flat 30%, including a 4% health and education cess and any applicable surcharge. This tax applies to gains from transferring Virtual Digital Assets (VDAs), which include cryptocurrencies and non-fungible tokens (NFTs). The acquisition cost can be deducted, but costs like exchange fees cannot.

Losses on one cryptocurrency cannot offset tax on gains from another or any other form of income. Each gain is taxed individually, making it possible to end up with a tax bill even in a year when you experience an overall loss. Several actions trigger tax liability, including selling crypto for rupees, swapping one crypto for another, and using crypto to pay for goods or services.

Crypto obtained as income, from mining, staking, airdrops, or as payment for work, is charged to tax at the slab rate when received. The 30% rate applies later on transferring the asset. Buying and holding cryptocurrency alone is not charged to tax in India. Only transfers trigger tax liability.