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Home > Income Tax > Cryptos Last Updated: Jan 12th 2024

Crypto Tax Help Center

An effort to help individuals, businesses who invest, transact, trade in Cryptos / VDAs, covering taxes like Income Tax, GST, TDS, Surcharge, and to support income tax return (ITR) filing in India.

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Frequently Asked Questions

1. What is VDA ?

VDA stands for 'Virtual Digital Asset', non-physical asset represented and uniquely tagged in digital form, recorded in a cryptographically secured, stored in a distributed ledger such as blockchain technology.

VDAs are not a currency recognised by the Govt of India, but treated as 'categorised asset' (not a 'capital asset', not as 'any other asset' from the income tax point of view).

VDAs include 'Virtual Currency', 'Crypto Currency', 'Non-Fungible Tokens' (NFT), Stablecoins (like USDT, USDC etc.)

'Digital Rupee', 'Central Bank Digital Currency' (CBDC) in India are not to be considered under VDAs.

Gains generated at the time selling / exchanging VDA to be treated as VDA Income taxed at a flat 30% tax rate without any provision to set-off the gains against any other income and / or carry forward the losses, also not to consider the expenses around trading such VDAs.

Learn more on CBDC vs UPI

2. Do I need to pay Quarterly Advance Tax for the Crypto Gains ?

Yes, similar to any other taxable income

You may calculate your advance income tax from Self-Service IT Filing Portal today.

3. What is the 1% TDS rule on Crypto Purchases ?

Govt of India introduced 1% TDS rule on Crypto purchases where the total amount during the purchase or year is more than Rs. 10,000. While the responsibility lies with the buyer, it could be through the 'Exchange' and / or 'Broker' and / or 'Intermediary'.

4. What is the difference between "Broker", "Exchange", "Intermediary"?

"Exchange" means any person / entity that operates an application or platform for transferring of VDAs, which matches buy and sell trades and executes the same on its application or platform.

"Broker" means any person / entity that operates an application or platform for transferring of VDAs and holds brokerage account / accounts with an Exchange for execution of such trades.

"Intermediary" could be either of the above based on the context.

5. Who should deduct and file 1% TDS

Per Income Tax Department, Section 194S shall come into effect from the 1st July 2022 to start deducting 1% on net consideration (after GST and exchange fees) above Rs. 50,000 for the financial year and file TDS using Form 26Q.

The responsibility to deduct TDS lie with the buyer of the VDA. In case an exchange or broker or an intermediary involved, who ever holds asset would be deducting the TDS and process the TDS accordingly. Per 194S, a clarification was given to have an agreement by an exchange with the person on the buyer side to deduct TDS and process accordingly.

Section 194S is applicable from Apr 1st 2022 to calculate TDS on the aggregate net consideration but TDS payment and filing of Form 26Q would start from 1st Jul 2022.

Deduction of TDS u/s 194S would not be applicable in case an individual buyer or HUF buyer having income under the head "profits and gains of business or profession", whose total sales / gross receipts / turnover from business carried on by him does not exceed one crore rupee or in case of profession exercised by him does not exceed fifty lakh rupee. This threshold is to be seen in the financial year immediately preceding the financial year in which the VDA is transferred.

Disclaimer: This article provides an overview and general guidance, not exhaustive for brevity. Please refer Income Tax Act, GST Act, Companies Act and other tax compliance acts, Rules, and Notifications for details.