India

In India, cryptocurrencies are legally defined as Virtual Digital Assets (VDAs) under the Finance Act, 2022. The country operates under a regulated tax framework specifically designed for VDAs, meaning there are clear rules for taxation and compliance, even if broader licensing requirements for trading platforms are not yet in place. The Central Board of Direct Taxes (CBDT) governs crypto taxation within India, primarily under the Income-tax Act, 1961. Investors face a flat 30% tax rate on all gains derived from the transfer of VDAs. This rate applies uniformly, with no distinction or preferential treatment for short-term versus long-term holdings. Only the cost of acquisition is deductible when calculating gains, investors cannot set off losses from VDA transfers against other income, nor can these losses be carried forward to future financial years. Beyond the 30% flat tax on gains, a 1% Tax Deducted at Source (TDS) applies to transfers exceeding ‚Çπ50,000 (or ‚Çπ10,000 for specified persons), which is adjustable against the final tax liability. For corporations, gains from VDA transfers are also taxed at a flat 30%, overriding standard corporate tax rates for such specific income. Goods and Services Tax (GST) of 18% applies to crypto-related services like exchange fees, but not directly to the transfer of VDAs themselves. There are no exemptions, thresholds, or allowances for the 30% tax rate on VDA gains. Specific crypto activities are also subject to this regime. Staking rewards, considered VDAs, are taxed at 30% upon their subsequent transfer, though the exact timing of taxation (at receipt versus transfer) remains somewhat unclear. Similarly, gains from the transfer of mined VDAs are taxed at 30%. While business costs for systematic mining operations may be deductible, they are typically limited to the cost of acquisition upon sale, and clear criteria for business classification are not fully specified. Decentralized Finance (DeFi) activities, including each VDA swap and liquidity interaction, trigger a 30% tax on any gains, and the deductibility of gas and other associated fees is not clearly defined. Non-fungible tokens (NFTs) are classified as VDAs, with their sales also subject to the 30% tax. Both converting crypto to fiat currency and crypto-to-crypto swaps (including stablecoin trades) are considered taxable events, with gains subject to the 30% flat rate. Regarding recent developments, the Budget 2026 introduced enhanced penalties for inaccurate reporting of VDA transactions, effective from April 2026. These penalties can be up to ‚Çπ50,000 for inaccuracies. However, the existing 30% tax rate on VDA gains and the 1% TDS mechanism remain unchanged.