Cryptocurrency Tax India: What You Must Know About Reporting, Penalties, and Compliance

When you trade, sell, or earn cryptocurrency, digital assets like Bitcoin or Ethereum that are treated as property by tax authorities. Also known as digital currency, it’s not cash — and that changes everything when it comes to taxes. In India, the government doesn’t care if you bought it on WazirX, CoinDCX, or Binance. If you made a profit, you owe tax. No exceptions. The Income Tax Department, India’s federal agency that enforces tax laws and audits financial activity tracks crypto transactions through exchange data, bank transfers, and third-party reporting tools. They don’t need you to confess — they’ll find out anyway.

The rules are simple: every time you sell crypto for rupees, trade one coin for another, or use it to buy something, it’s a taxable event. If you bought Bitcoin at ₹30 lakh and sold it at ₹50 lakh, that ₹20 lakh gain is taxed at 30%, no deductions allowed. Even if you held it for 10 years, you still pay 30%. There’s no long-term capital gains break like with stocks. And if you earn crypto from staking, airdrops, or mining? That’s treated as income, any crypto received as payment or reward, subject to regular income tax rates — taxed at your full slab rate, even if you never sold it. The Crypto Tax Compliance, the legal obligation to report all crypto gains and income to Indian tax authorities isn’t optional. The government now requires exchanges to share user data. If you didn’t report, they already know.

People think they can hide behind anonymous wallets or offshore exchanges. They can’t. The Crypto Tax Evasion, the illegal act of failing to report crypto income or gains to evade tax liability penalty in India is brutal: up to 10 years in prison and fines that can hit ₹1 crore. The Enforcement Directorate has already frozen bank accounts linked to unreported crypto. One trader in Mumbai got hit with ₹87 lakh in back taxes and penalties after just two years of trading. He didn’t file a single return. He thought no one was watching. He was wrong.

You don’t need a chartered accountant to survive this. You need records: dates, amounts, purchase price, sale price, wallet addresses. Use free tools like Koinly or CoinTracker to auto-import your trades. File your ITR-2 with Schedule CG. If you’re unsure, get help before the deadline. Ignorance isn’t an excuse anymore. The system is live. The audits are real. And the next person they catch won’t be a beginner — they’ll be you.

Below, you’ll find real cases, updated rules, and hard truths about what happens when you ignore crypto taxes in India. No fluff. No theory. Just what you need to stay out of trouble.