How to Calculate Crypto Taxes in India: A Step-by-Step Guide
The Indian government introduced specific taxation rules for cryptocurrencies (Virtual Digital Assets - VDAs) in 2022, which can seem complex. This guide simplifies the process, helping you understand your tax obligations.
The Two Golden Rules of Indian Crypto Tax
Remember these two main rules for all your crypto transactions:
- Flat 30% Tax on Profits: Any profit you make from selling a cryptocurrency is taxed at a flat rate of 30% (plus applicable cess and surcharge). It doesn't matter if you held it for a day or a year.
- 1% TDS on Transactions: A 1% Tax Deducted at Source (TDS) is applied to the total sale amount if it exceeds ₹50,000 in a financial year (or ₹10,000 for certain payers). This TDS can be claimed back when you file your Income Tax Return (ITR).
Step-by-Step Calculation
Let's take an example. Suppose you bought 0.1 Bitcoin for ₹4,00,000 and later sold it for ₹5,50,000.
Step 1: Calculate Your Capital Gain (Profit)
This is the simplest part. The formula is:
Capital Gain = Sale Price - Purchase Price
In our example: ₹5,50,000 - ₹4,00,000 = ₹1,50,000 (Your Profit)
Step 2: Calculate the 30% Tax on Profit
Now, apply the 30% tax rate to the profit you just calculated.
Tax on Gain = Capital Gain × 30%
In our example: ₹1,50,000 × 0.30 = ₹45,000
Step 3: Calculate the 1% TDS on the Sale Value
TDS is calculated on the *total sale amount*, not the profit.
TDS = Sale Price × 1%
In our example: ₹5,50,000 × 0.01 = ₹5,500
Putting It All Together
Your total tax liability for this specific transaction is the 30% tax on profit. The TDS is an advance tax that gets deducted, which you can adjust against your final tax liability.
- Your Tax Liability: ₹45,000
- TDS Deducted: ₹5,500
This calculation can get complicated with multiple transactions. That's why using an automated tool is essential.
Simplify Your Life with Our Tool
Why do manual calculations and risk errors? Our Free Crypto Tax Calculator does all this for you in seconds. Just enter your buy and sell prices, and we'll handle the rest, giving you a clear breakdown of your tax liability.