India's 30% Crypto Tax: What Bitcoin Traders Must Know in 2025

If you're trading Bitcoin or any other cryptocurrency in India, you're paying 30% tax on every profit - no exceptions. That’s not a mistake. It’s the law. Since April 1, 2022, India has imposed one of the harshest crypto tax regimes in the world. And it’s gotten even tougher. By July 2025, a new 18% GST on exchange fees was added on top of the 30% income tax and 1% TDS. There’s no way around it. If you made money, you owe taxes. But here’s what no one tells you: you might still owe tax even when you lost money overall.

How the 30% Crypto Tax Actually Works

The tax is based on Section 115BBH of the Income Tax Act. It applies to all Virtual Digital Assets (VDAs), including Bitcoin, Ethereum, NFTs, and tokens. The rate is flat: 30% on your profit, no matter how long you held it. That’s different from stocks or real estate, where holding for over a year lowers your tax rate. In India, if you bought Bitcoin yesterday and sold it today for a profit, you pay 30%. If you held it for five years, you still pay 30%.

The math is simple: (Selling Price - Purchase Price) × 30% = Tax Due.

Let’s say you bought 0.5 BTC for ₹15,00,000 and sold it for ₹20,00,000. Your profit is ₹5,00,000. Your tax? ₹1,50,000. That’s it. No deductions. No adjustments. Not even for the ₹2,000 you paid in exchange fees or the ₹500 wallet gas fee.

The Hidden Trap: No Loss Offsetting

This is where most traders get blindsided. You can’t use losses to reduce your tax bill. Not even a little.

Imagine this: You made ₹40,000 on Ethereum but lost ₹40,000 on Solana. Net profit? Zero. But under Indian law, you still pay ₹12,000 in tax on the Ethereum gain. The Solana loss disappears. It doesn’t carry forward. It doesn’t offset anything. You pay tax on the win, and the loss is erased.

That’s not how taxes work anywhere else. In the U.S., you can offset crypto losses against gains. In Germany, you pay nothing after one year. In India, you pay on every single profitable trade - even if your total portfolio is underwater.

Active traders are hit hardest. If you’re buying and selling multiple coins daily, you could easily have 10 profitable trades and 8 losing ones. But you only pay tax on the 10 wins. The losses? Gone. That’s why many traders say the system feels rigged.

1% TDS: The Silent Deduction

On top of the 30% tax, there’s a 1% Tax Deducted at Source (TDS) under Section 194S. It kicks in when you transfer crypto worth more than ₹50,000 in a year (₹10,000 for certain cases like P2P). The exchange or wallet you use automatically takes 1% of the transaction value and sends it to the government.

Here’s the catch: TDS is not your final tax. It’s just a prepayment. You still have to report your full gains in your income tax return and pay the 30% difference. If you paid ₹1,000 in TDS on a ₹1,00,000 sale, you still owe ₹30,000 in income tax - minus the ₹1,000 you already paid.

Many users get confused here. They think TDS is the full tax. It’s not. It’s a withholding. If you don’t file your return, you could end up paying double - or worse, get flagged by the tax department.

18% GST on Exchange Fees: The New Layer

In July 2025, the government added another layer: 18% GST on all crypto platform services. That includes trading fees, withdrawal fees, and even staking rewards processed through Indian exchanges.

Let’s say you paid ₹1,000 in trading fees on CoinSwitch. Now, ₹180 of that goes to GST. It’s not part of your income tax - it’s a separate charge. And it’s not refundable. You can’t claim it back as a business expense. You just pay it and move on.

This change made India the only major country to tax crypto services with GST. Most places treat crypto as property, not a service. In India, every click on an exchange comes with a hidden tax.

What You Can and Can’t Deduct

The rules are strict. Only one thing counts as a deduction: your original purchase price. That’s it.

• ✅ Allowed: Cost of buying the crypto (in INR at the time of purchase)
• ❌ Not allowed: Exchange fees, wallet fees, gas fees, mining costs, software subscriptions, accounting fees, VPN costs

Even if you hired a tax advisor to track your trades, you can’t deduct their fee. If you used a hardware wallet, you can’t claim the ₹5,000 you spent. The law doesn’t care. Only the price you paid for the asset matters.

This is why tracking your cost basis is critical. If you bought Bitcoin in 2020 at ₹2,50,000 per coin and sold in 2025 at ₹8,00,000, your gain is ₹5,50,000. But if you can’t prove you bought it at ₹2,50,000 - maybe because you used a foreign exchange that doesn’t keep records - the tax department might assume you bought it at ₹0. That means you owe 30% on ₹8,00,000. That’s a ₹2,40,000 tax bill on a coin you actually paid ₹2,50,000 for.

Record Keeping: Your Only Protection

You must keep detailed records of every transaction. That includes:

• Date and time of purchase and sale
• Amount of crypto bought/sold
• INR value at the time of transaction
• Exchange or wallet used
• Transaction IDs
• Proof of payment (bank statements, UPI receipts)

For active traders, this can mean tracking hundreds of transactions a year. Many use tools like Koinly, ClearTax, or CoinTracker, which now have India-specific modules updated through September 2025. These tools auto-import data from exchanges and calculate your gains, losses, and TDS.

But if you trade on P2P platforms like Binance P2P, CoinSwitch, or local Telegram groups, you’re on your own. No auto-sync. No records. You have to manually log every trade. That’s 20-30 hours a year for casual traders. For active ones? 50+ hours.

How This Is Changing Trader Behavior

Since the tax rules came in, Indian crypto trading volumes dropped 40-60%. Many retail traders left. Others moved to international platforms like Binance or Kraken to avoid TDS and GST. But that creates new problems: no local support, harder to track taxes, and potential legal gray areas.

Long-term holders are now the majority. Why? Because if you buy and hold for years, you only pay tax once - when you sell. Active traders? They’re paying tax every time they move assets. That’s why you see fewer day traders now. The system is designed to discourage frequent trading.

Institutional investors? Almost none. Hedge funds and VCs won’t touch crypto in India because the tax structure is too punitive. Compare that to Singapore, where crypto gains are tax-free, or Portugal, where personal crypto sales are exempt. India is pushing people away.

What’s Next? Will the Tax Change?

Right now, there are no signs the government plans to soften the rules. The 30% rate, 1% TDS, and 18% GST are all still active as of December 2025. The Finance Ministry has said the goal is to bring crypto into the formal economy - not to encourage it.

Tax experts warn the system is unsustainable. It’s driving compliance costs through the roof. Many traders are filing returns with zero gains just to avoid audits. Others are hiding transactions. The government’s own data shows crypto tax collections are far below projections.

Some analysts think loss offsetting might be allowed by 2027. Others think the TDS threshold could rise from ₹50,000 to ₹2,00,000. But nothing is confirmed. Until then, you operate under the current rules - no exceptions.

What Should You Do Right Now?

If you’ve traded crypto in India since 2022:

1. Collect all your transaction records - even old ones.
2. Use a crypto tax tool that supports India (Koinly, ClearTax, or CoinTracker).
3. Calculate your gains and losses for each financial year (April to March).
4. Report all gains in Schedule VDA of your ITR-2 or ITR-3 form.
5. Claim TDS credits if you’ve had 1% deducted.
6. Don’t ignore P2P trades - they’re still taxable.

If you’re just starting out:

• Only trade on platforms that deduct TDS - it simplifies compliance.
• Avoid P2P unless you’re ready to track every transaction manually.
• Hold longer if you want to reduce your tax burden - but remember, holding doesn’t lower the rate.
• Never assume a loss offsets a gain. It doesn’t.

There’s no magic trick. No loophole. No way to legally avoid the 30% tax if you profit. The only way to reduce your tax is to reduce your gains - by trading less, holding longer, or accepting that crypto is a high-tax asset in India.