Crypto Tax Reporting India: Rules, Risks, and Real Strategies

When it comes to crypto tax reporting India, the legal requirement to declare cryptocurrency gains and pay taxes on them under Indian income tax laws. Also known as VDA tax compliance, it’s not optional—it’s enforced by the Income Tax Department with real penalties. If you bought, sold, traded, or staked crypto in the last year, you owe taxes. No exceptions. The government doesn’t care if you used Binance, CoinSwitch, or a non-custodial wallet. They track transactions through bank records, exchange data, and TDS deductions.

The 30% crypto tax, a flat rate applied to all profits from cryptocurrency transactions in India, regardless of holding period. Also known as capital gains tax on digital assets, it’s one of the highest in the world. Unlike stocks, there’s no long-term vs short-term distinction. Sell Bitcoin for a profit? Pay 30%. Trade ETH for SOL? Pay 30%. Even gifting crypto to a friend triggers a taxable event. Then there’s the 1% TDS on crypto, a tax deducted at source every time you sell or trade crypto on an Indian exchange. Also known as deduction at source for virtual digital assets, it’s automatically taken out before you get your funds. This isn’t a refundable credit—it’s a cash flow hit. And don’t forget the 18% GST on exchange fees, mining equipment, and even wallet services. These rules make crypto feel like a high-cost hobby, not an investment.

But here’s the twist: millions still use crypto in India. Why? Because for many, it’s not about speculation—it’s about survival. Remittances from abroad, protection against rupee inflation, access to global DeFi yields—all things the banking system won’t offer. That’s why non-custodial crypto wallet, a wallet where you hold your own private keys without relying on an exchange or third party. Also known as self-custody wallet, it’s the only way to truly own your crypto in India. You can’t avoid taxes by using one, but you can avoid being locked out of your funds if an exchange gets shut down or freezes accounts. The real risk isn’t the tax—it’s losing access to your coins because you trusted someone else to hold them.

So what do you do? Report everything. Keep records of every trade, every gas fee, every airdrop received. Use a simple spreadsheet or a free crypto tax tool that works with Indian exchanges. Don’t wait for a notice from the tax department. If you’re holding large amounts, consider legal relocation to a zero-tax country like the UAE or Georgia—but that’s a $50K+ move, not a hack. For most, the answer is simpler: know the rules, pay what’s due, and keep your keys safe. The posts below break down real cases, common mistakes, and how to stay compliant without overpaying.