VDA Tax India: What You Need to Know About Crypto Tax Rules in India

When you buy, sell, or trade Virtual Digital Assets, a category that includes cryptocurrencies, NFTs, and other tokenized digital items recognized by Indian tax law. Also known as VDA, these assets are treated as taxable property under India’s Income Tax Act since 2022. Unlike traditional investments, VDAs don’t get capital gains treatment—they’re taxed at a flat 30% on profits, with no deductions for losses or expenses. This means if you bought Bitcoin for ₹5 lakh and sold it for ₹8 lakh, you owe ₹90,000 in tax, even if you lost money on Ethereum the same year.

India’s VDA tax, a specific tax regime introduced to bring clarity to digital asset trading. Also known as crypto tax, it applies to every transaction where value changes hands—swaps, trades, or even gifting. Even if you trade one crypto for another, like ETH for SOL, the IRS-style rule treats it as a sale. Plus, there’s a 1% TDS on all payments over ₹10,000 made to exchanges or peer-to-peer sellers, which gets deducted automatically and can be claimed as credit later. This system is designed to track activity, not encourage it. The government doesn’t care if you’re holding long-term or day trading—you pay 30% on gains, no matter what. And unlike stocks, you can’t offset losses against other income. If your portfolio dropped 50% this year, tough luck—those losses don’t reduce your tax bill.

Reporting is just as strict. You must declare all VDA transactions in your annual tax return under Schedule 115BBH. Exchanges like WazirX, CoinDCX, and ZebPay now provide transaction histories, and the Income Tax Department cross-checks them with your filings. If you didn’t report a trade, you could face penalties up to 200% of the tax evaded. Even if you used a foreign exchange or cold wallet, the law still applies if you’re an Indian resident. The rules don’t care about your wallet’s location—only your tax residency.

What about airdrops and mining? Airdropped tokens are taxed as income at their fair market value when you receive them. Mining rewards? Same rule. If you earn 0.5 ETH from staking, that’s taxable income based on its price on the day you got it. No exceptions. And if you hold VDAs as inventory for a business? Then you’re subject to regular business income tax, not the 30% flat rate.

The bottom line? India treats crypto like gambling—not investing. There’s no long-term holding benefit, no loss carryforward, and no room for guesswork. You either track every trade, or risk being flagged. The system isn’t perfect, but it’s here to stay. Below, you’ll find real-world breakdowns of how people are handling this tax, what scams prey on confused users, and how to stay compliant without overpaying.