How Is Crypto Tax Calculated?

Crypto tax is computed on income that has not been disclosed or reported, whether it is treated as personal income or capital gains.

Under normal circumstances, profits from crypto transactions are taxed at a flat rate of 30%, regardless of any losses incurred during the same financial year. Losses cannot be set off against gains.

However, when crypto income is undisclosed, a significantly higher penalty applies.

Example:

If you earned ₹5,000 in crypto profits in 2023, the standard tax liability would be ₹1,500 at the 30% rate. But if this income was not reported, the tax payable rises to ₹3,500, which is 70% of the total crypto income.

Is 70% the Standard Tax Rate?

No. The 70% rate is a penalty, not the standard tax.

  • Standard taxation: 30% tax plus 4% cess under Section 115BBH of the Income Tax Act

  • Penalty on undisclosed income: 70% tax under Section 158B

  • Failing to report crypto income triggers punitive taxation instead of regular tax treatment.

How Can You Check If You Owe Crypto Tax?

Review your income tax returns for both previous and current financial years. If crypto transactions were accurately reported, your tax liability may already be settled.

If they were omitted, you must disclose the information immediately and calculate tax based on your transaction history.

Most Indian crypto exchanges, along with FIU-registered international platforms, provide detailed dashboards showing:

  • Total number of trades

  • Net gains

  • Losses

  • Transaction history

These records can be used to compute your exact tax obligation.

Frequently Asked Questions

How do you report VDA in your ITR?

Virtual Digital Assets (VDAs) can be declared through the designated section on the Income Tax Department’s portal or via authorised ITR filing software.

Can crypto tax be legally avoided in India?

There is no lawful way to avoid declaring crypto income. Even if funds are routed through a foreign account, income earned abroad must still be disclosed under foreign income rules.

Why is crypto taxed so heavily in India?

Authorities view crypto trading as high-risk for retail investors. As a result, strict taxation has been imposed by the government, supported by the RBI and the Ministry of Finance, to limit speculative activity.

Disclaimer:

BFM Times provides information strictly for educational purposes and does not offer financial or tax advice. Readers should consult a qualified financial advisor before making investment or tax-related decisions.