Tax on crypto in INDIA is a hot topic as the Indian Government announced that the following will be applicable from 1st April 2022. Tax is applicable on every cryptocurrency i.e Bitcoin, Ethereum, Binance, etc. A flat tax on profit at 30% + Surcharge + 4% cess applied on every profit from April 1, 2022. Surcharge and cess are applicable on the taxed amount and the rates are according to the basic tax rules. (If you made a profit of 10,000 then on this amount you need to pay 30% tax = 3000 & on the 3000 you need to pay the Surcharge and Cess.) 1% TDS ( Tax deducted at source) applied from JULY 1, 2022 Loss from Digital Virtual Assets cannot be set off. It should be disclosed as Capital Gains in the ITR. CBDC is one of a kind digital token. They function similar to cryptocurrencies but they are not a cryptocurrency. The major difference between CBDC and Crypto is that Cryptocurrency is decentralized and CBDC is centralized (here Centralized means Central Bank/Government has full authority over it and Decentralized means Central Bank/Government doesn’t have any authority over it).

1. Tax on Crypto in INDIA & CBDC explained
on demand
Tax on Crypto in INDIA
Tax on crypto in INDIA
“IF YOU MAKE A PROFIT, THEN THE GOVERNMENT ALSO
MAKES A PROFIT BUT IF YOU MAKE A LOSS IT’S YOUR
LOSS.”
After the passing of the bill, a similar kind of statement is circulated
on different social media platforms.
Tax on crypto in INDIA is a hot topic as the Indian Government
announced that the following will be applicable from 1st April 2022.
Tax is applicable on every cryptocurrency i.e. Bitcoin, Ethereum,
Binance, etc.
• A flat tax on profit at 30% + Surcharge + 4% cess applied on every
profit from April 1, 2022. Surcharge and cess are applicable on the
taxed amount and the rates are according to the basic tax rules. (If

2. you made a profit of 10,000 then on this amount you need to pay
30% tax = 3000 & on the 3000 you need to pay the Surcharge and
Cess.)
• 1% TDS (Tax deducted at source) applied from JULY 1, 2022
• Loss from Digital Virtual Assets cannot be setoff
• It should be disclosed as Capital Gains in the ITR
• It will be your responsibility to disclose the profit and pay the tax,
hence be careful of any frauds in the future.
• At the end of the financial year, you have to file this.
Let us discuss the above in detail.
The statement given by Nirmala Sitharaman says that “any income
from TRANSFER of any virtual digital asset shall be taxed”.
According to my research, everything depends on the meaning
of TRANSFER as mentioned in the 2022 Union bill.
Meaning of TRANSFER as per Income Tax Act
“Transfer”, in relation to a capital asset, includes sales, exchange, or
the relinquishment of the asset or extinguishment of asset therein.
(Section 2 Clause 47, Income Tax act, 1961-2021) Hence if you do
the following, then only you will be taxed. Let us discuss different
scenarios.

3. Tax on Crypto Trading/Investing in INDIA
Tax on Trading/Investing in INDIA
In the process, you will be taxed as mentioned above. If you made a
profit of 1000 in Bitcoin and a loss of 500 on Ethereum then you have
to pay 30% tax on 1000 is 300 and forget about the 500 that you lose.
You can’t set that loss off (Set off of losses means adjusting the losses
against the profit or income of that particular year.) The deduction is
allowed only on the cost of purchase. No deduction on Interest or
brokerage.
Tax on Crypto Mining in INDIA

4. Tax on Mining in INDIA
During the mining process, the miner gets any of the coins i.e Bitcoin,
Ethereum, etc. as a reward. In this process we are neither selling,
neither exchanging nor relinquishing any digital virtual assets hence
not fulfilling the meaning of TRANSFER, so we are not liable to pay
any of the taxes mentioned above.
The day you get the reward, the market value of that coin will be
considered as the revenue of your business income. You need to
liquidate the reward ASAP. The tax will be cut according to the
general Tax slab rates. The good part is that Deduction of your
expenses is allowed here.
Example: Imagine you get 1 BTC or USDT or any other
cryptocurrency as your reward and after converting the reward into
rupees it comes to around 20,000, so 20,000 will be your reward and
you need to liquidate it before its price moves up or down in order to
pay it under regular tax slabs.
But there is a catch here. If you hold the coin that you got as a reward
and the price of that coin goes up, then in this case you made a profit.
Hence when you sell that coin you need to pay the taxes according to
the above-mentioned rates (flat tax on profit at 30% + Surcharge +
4% cess). If you make losses, then that’s on you.
Example: Imagine you get 1 BTC or USDT or any other
cryptocurrency as your reward and after converting the reward into
rupees it comes to around 20,000 and you decide to hold the coin
rewarded to you for some time. After 5 days the price reaches 30,000

5. hence you made a profit of 10,000. You will be taxed on that 10,000
rupees i.e. flat tax on profit at 30% which comes up to 3000.
And if the price goes down from 20,000 to 15,000 then you make a
loss of 5000. It is on you; the government will not set it off in any
way.
Also read: BCOIN| BombCrypto| Bombcrypto Coin| Play-to-Earn
Game 2022
Tax on Crypto Salary in INDIA
Tax on Salary in INDIA
It is similar to Tax on rewards because the definition of TRANSFER
is not satisfied here + you will get an extended deduction of 50,000
that is generally applicable to any kind of salary in INDIA.

6. Tax on Crypto Airdrop in INDIA
Tax on Airdrop in INDIA
It is my assumption that Airdrops will also be taxed at 30%. The
calculation of how it will be taxed is not clear yet. At the initial stage,
the value of Airdrops is very less. As time passes by the value
increases. In my opinion, the tax will be applied to the selling price.
Tax on Crypto Gifts in INDIA

7. Tax on Crypto Gifts in INDIA
There can be 2 cases here. Let’s discuss them below
A gift to Blood relatives
In this case, the gift that you receive will be exempted from tax. A gift
can be any kind of Cryptocurrency or NFT.
Example: Let’s imagine Mr. Sanket purchased 2 BTC or ETH or any
type of NFT for 40,000 on 1st May 2022. He gifted the Coin or NFT
to his mother on 1st January 2023. His mother sold the coin for
50,000.
Tax Calculation:
• For Mr. Sanket: No tax on gifting
• For his Mother on receipt of the gift: No tax on receipt of the gift
from the blood relatives.
• For Mother on sale of the gift: 30% Tax on profit & here the profit
is 50,000-40,000= 10,000. Hence the recipient has to pay the tax in
this case.
The gifts received by a bride or bridegroom on the occasion of
marriage are tax-free. The parents of the bride or bridegroom cannot
take the benefit of exemption.
CryptoCultureNBT

8. A gift to others
If you give a gift to people other than blood relatives, then in this case
if the value of the gift is less than 50,000 in one financial year then it
is exempted. If the value of the gift crosses 50,000 then it is fully
taxable at slab rates and you have to mention it as income from other
sources.
And after that, if you want to sell it then the profit will be calculated
as the market price at the time of sale-the slab rate tax amount you
already paid. On this profit, you will be taxed at 30%. The value at
which the gift was given to you – the current value at which you are
selling it = profit.
Also read: All the Important CRYPTO queries with answers
Tax on NFT in INDIA
Tax on NFT in INDIA
Tax at flat 30% + surcharge + 4% cess will be applicable here on any
gains on any type of Non-Fungible Tokens (NFT). The deduction will
be allowed on Purchase Price and no deduction for Brokerage,
Royalty, etc. And you cannot set off your losses in this case too.

9. I have discussed most of the possible cases on how the tax will be
implemented on different Virtual digital assets. I hope this will be
helpful to you. Now let us discuss the future prospect of Digital
currency in INDIA.
One more important topic that was discussed in this recent bill was
“Central Bank Digital Currency (CBDC)”
This video helped me a lot in understanding the tax in different
scenarios. You can have a look.
Central Bank Digital Currency (CBDC)
CBDC – Central Bank Digital Currency
CBDC is one of a kind digital token. They function similar to
cryptocurrencies but they are not a cryptocurrency.
The major difference between CBDC and Crypto is that
Cryptocurrency is decentralized and CBDC is centralized (here
Centralized Means Central Bank/Government has full authority over
it and Decentralized Means Central Bank/Government doesn’t have
any authority over it).

10. CBDC is generally pegged to the value of that country’s fiat currency.
USDT is an example of which this method works. Indian currency is
Rupee, so the value of one token will be 1 rupee and the Reserve
Bank of INDIA (RBI) is working on this.
We can say that 1 CBDC crypto price will be equivalent to 1 Indian
Rupee. You will convert your paper currency into digital currency and
the value of both will be the same.
One more difference is that Central Bank Digital Currency is
considered as only a currency and not an asset but in the case of
Cryptocurrency, it can be considered as both, currency and asset.
The similarity is that both, Cryptocurrency & Central Bank Digital
currency work on BLOCKCHAIN technology.
In the case of cryptocurrency, anyone can access the details of the
transactions happening as it works on the Public Blockchain.
In the case of Central Bank Digital Currency, anyone can’t access the
details of the transactions happening as it works on a Private
Blockchain. Here, the sender, the receiver & the central bank will
have all the details of the transaction. Basically, it is a Bank on
Blockchain.
Also read: Cardano ADA| Cardano Price| Cardano Crypto:
Sensational coin

11. Why Central Bank Digital Currency (CBDC)?
1. Privacy: As it will be based on a Private Blockchain no third party
can have the access to the details of transactions as discussed
above. Information is available for authorized parties only because
data is shared only with network participants that have a need to
share the information.
2. Security: Information on a blockchain can’t be altered and is
encrypted. A private blockchain network helps prevent fraud and
unauthorized activity.
3. Performance: Blockchain streamlines business processes.
Transactions are automated with smart contracts and can be
completed faster and more efficiently because the number of nodes
is less in this case compared to the public blockchain.
4. Global Transactions: This one is my favourite. Real-time payment
will be possible without much delay in the transaction process.
Running to different exchanges for conversion of currency will be
over.
T Rabi Shankar, Deputy Governor, RBI said that “lt is conceivable for
an Indian importer to pay its American exporter on a real-time basis
in digital Dollars, without the need of an intermediary. This
transaction would be final, as if cash dollars are handed over, and
would not even require that the US Federal Reserve system is open
for settlement.”
The Central Bank digital currency (CBDC) launch date in INDIA is
yet to be decided. India’s official digital currency may launch by early

12. 2023 according to some reports. The exact regulation governing this
Central Bank Digital Currency (CBDC) is yet to be finalized.
FAQ on Tax on Crypto & CBDC in INDIA
Where to buy Central Bank Digital Currency?
CBDC hasn’t been launched in INDIA yet. Work is still in progress
and it is estimated to be launched in early 2023. The Reserve Bank of
India(RBI) is the central Government body that is working on this.
Which central banks have a digital currency?
In INDIA’s case, it is the Reserve Bank of India (RBI). In total 9
countries have launched their CBDC, 15 countries have it as a Pilot
Project and 16 countries are developing it. You can look at this
tracker to have a detailed look at what’s happening in the world.
Will central bank digital currency replace bitcoin?
Not necessarily. Both have different functionality altogether. The
major factor between both is that one is centralized and the other is
decentralized.
The true essence of Crypto is that is not governed by any
government/banks, anyone can mine them and the transaction details

13. are available to all as it is on an open blockchain and there is no
regulation on it.
On the other hand, CBDC is governed by central banks/governments
and is regulated.
The implication of taxes on Crypto is to make people shift to Central
Bank Digital Currency and to stop untraceable Crypto transactions
that are happening all over the globe in order to buy Drugs, sponsor
terror & buy/sell illegal weapons.
Are Central Bank Digital Currencies
cryptocurrencies?
Central Bank Digital Currencies are not Cryptocurrencies. They may
be based on similar technology i.e. Blockchain but they are
completely different from each other. The major difference is
discussed in the above explanation.
What is the tax on crypto gains in India?
You have to pay a flat 30% tax on Crypto gains in India. If you buy a
crypto coin at 10,000 and sell it after some time at 11,000 then your
profit will be 1000. So, you have to pay the tax on the 1000 profit at
30% hence the tax amount will be 300. You have to declare it in your
yearly returns.
Important: You need to be true to yourself and mention the tax
on profit on your yearly IT returns. You have to do it yourself.

14. Hence be aware of any kind of fraud on websites or links or apps
or even any call telling you that they are from the Incom Tax
Department and will help you file taxes.