After Donald Trump’s victory in the US presidential election, there has been a record rise in the price of all cryptocurrencies, including Bitcoin. Recently, the price of Bitcoin crossed 1 lakh dollars. As a result, investors are once again eyeing cryptocurrency. If you are also planning to invest in cryptocurrency, it’s important to know how much tax you will have to pay in India. Let us tell you that while cryptocurrency is not legal tender in India, there is no ban on investing in it.
Tax on Cryptocurrency in India: 30% Flat Rate
Cryptocurrencies are treated as virtual digital assets (VDA) under India’s Income Tax Act. Even though they are not officially recognized by the Indian government, they are taxed according to Section 115BBH and Section 194S. This means there is a 30% tax on the profit made from selling VDAs and a 1% tax deduction at the source (TDS) on the transaction. So, if you invest in cryptocurrency and make a profit, you’ll need to pay a 30% tax on your earnings.
Is Cryptocurrency Legal in India?
Cryptocurrency is digital money that uses encryption for security. It works on a decentralized network using blockchain technology, which helps run currencies like Bitcoin. Currently, India is planning to create laws for cryptocurrency. The government introduced a 30% tax on cryptocurrency profits in 2022, but cryptocurrency is not fully legal yet.
A team of officials from the RBI, SEBI, and the Ministry of Finance is working on a policy for cryptocurrencies. They are still reviewing the policy, and once they finish, they will allow people to share their opinions before finalizing India’s approach to cryptocurrency.
How to Invest in Cryptocurrency in India
1. Choose a Platform
Select a trusted exchange like WazirX, CoinDCX, or ZebPay.
2. Register and Verify
Create an account and complete the KYC process with your PAN, Aadhar, and bank details.
3. Deposit Funds
Transfer INR using UPI, net banking, or wire transfer.
4. Buy Cryptocurrency
Select your preferred cryptocurrency (e.g., Bitcoin, Ethereum) and place a buy order.
5. Secure Your Crypto
Store your crypto in exchange wallets or hardware/software wallets like Ledger or MetaMask.
6. Monitor & Track
Track your investments through platforms like CoinMarketCap and CoinGecko.
7. Sell When Needed
Sell when desired, converting it to INR or other cryptos.