Cryptocurrency Taxation in India – Budget 2022

India has finally introduced a capital gains tax on crypto gains!  You’ve probably seen it already. News media is talking about it. Twitter is going bonkers over this story.

During Budget 2022, the finance minister made a big announcement that virtual digital assets including cryptocurrencies will be taxed from 1st April 2022. 

Yes, it’s big news! Not just this, there was no negative impact on the prices of most of the popular crypto tokens including Bitcoin, ETH, WRX, SOL, ADA, DOGE, MATIC listed on Indian exchanges.


Now let us understand what exactly are virtual digital assets?

The definition of digital assets as per the Budget 2022 is as below:

“Any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically;“.

Basically virtual digital assets include private cryptocurrencies, DeFi (decentralized finance), and non-fungible tokens (NFTs). Prima facie, excludes digital gold, central bank digital currency (CBDC), or any other traditional digital assets.


Crypto taxation rules:

  1. A flat rate of 30% will be levied on the income from virtual digital assets regardless of the tax slab
  2. Indexation of the gains is not allowed.
  3. The gifting of crypto tokens and virtual assets would be taxed at the hands of the recipient at the same rate. No recipient will be excluded from taxation.
  4. In order to tax crypto transactions, a 1% TDS will be levied. Our understanding is that this 1% is within the overall 30% tax. The monetary threshold above which the TDS is applicable will be intimated later.
  5. Can set off crypto losses in the same year with crypto gains
  6. Losses or gains arising from digital virtual assets cannot be set off with any other gains
  7. Losses cannot be carried forward

So if you’ve made two transactions during the financial year 2022-23, one where you turn a profit of INR 1000 and one where you lose INR 700 in virtual digital assets. Then the government will only tax the net again. In this case, INR 300 i.e. INR 1000 - INR 700. 

However, with cryptos,  you won’t be able to offset losses using gains made via the sale of other assets — stocks for instance, nor can you carry forward the loss next financial year i.e 2023-24 to set off it with net tax.

Overall, the government has neither legalised nor banned cryptocurrencies. But it’s made a move to discourage short-term trading, at least.


    Get your weekly dose of Money Masala from us.

    Spread the love

    Leave a comment

    Wealth Cafe Financial Services Pvt Ltd (formerly 'Wealth Cafe Financial Advisors Pvt Ltd') is a AMFI registered ARN holder with ARN -78274.

    Wealth Cafe Financial Services Pvt Ltd (formerly 'Wealth Cafe Financial Advisors Pvt Ltd') is a SEBI registered Authorised Person (sub broker) of Motilal Oswal Financial Services Ltd with NSE Regn AP0297087003 and BSE Regn AP0104460164562.


    Copyright 2010-20 Wealth Café ©  All Rights Reserved