The 30% Crypto Tax in India: What Counts and What Doesn't

The rate is a clean rule with a fuzzy edge. Most investors know the rate; fewer can list which of their activities trigger it and which do not. The scope question is the next layer after the rate question, and it is where most filing surprises live. This piece walks the two columns directly: what counts as a taxable transfer event under Section 115BBH, and what falls outside it, with worked treatment of the edge categories (staking, airdrops, mining, gifts, inheritance) that produce most of the confusion.

The 30 percent crypto tax in India under Section 115BBH applies to gains on the transfer of virtual digital assets: sales for INR, sales for foreign currency, crypto-to-crypto swaps, payments received in crypto, and similar transfers. It does not apply to purchases, wallet-to-wallet transfers between accounts you control, or simply holding crypto. Edge categories like staking rewards, airdrops, and mining income are taxed separately at receipt and again under Section 115BBH on subsequent sale.

What counts as a taxable transfer

Section 115BBH applies to "income from transfer of virtual digital asset." Transfer is defined under Section 47A of the Income Tax Act and covers any change in beneficial ownership of the asset, whether for consideration in INR, in foreign currency, in another VDA, or in another form of value. The following activities are taxable transfer events.

Sale of crypto for INR. The most straightforward case. The investor sells Bitcoin (or any VDA) on the platform for INR. The transfer event occurs at the moment of sale. The taxable gain is the sale consideration minus the cost of acquisition of the units sold.

Sale of crypto for foreign currency. Functionally identical to the INR sale, with the consideration converted to INR at the applicable exchange rate for the computation. The transfer event occurs at the moment of sale.

Crypto-to-crypto swap. When the investor swaps Bitcoin for Ethereum (or any VDA-to-VDA exchange), the swap is a transfer of the Bitcoin under the Income Tax Act. The taxable event occurs at the moment of the swap. The sale consideration for the Bitcoin is the market value of the Ethereum received. The gain on the Bitcoin (its current market value at the swap minus the Bitcoin's cost basis) is taxable under Section 115BBH. The Ethereum received is treated as a separate acquisition with its own cost basis (the market value of the Ethereum at the swap time). This is the most common scope surprise; the discussion below in Section 3 walks the mechanic with an example.

Receipt of crypto as payment for goods or services. If a freelancer is paid in crypto for work delivered, the crypto receipt establishes a cost basis at the market value at the time of receipt. The subsequent transfer of that crypto is a taxable event under Section 115BBH, with the gain measured against the receipt-time cost basis.

Use of crypto to purchase another asset. Buying a non-VDA asset (a piece of property, a service, a non-VDA financial product) using crypto is a transfer of the crypto. The transfer event occurs at the moment of use. The sale consideration for the crypto is the value of the asset acquired.

Sale of an NFT. Non-fungible tokens within the VDA scope per Section 2(47A) notifications are taxed identically to fungible crypto on transfer. The same rate, the same cost-basis treatment, the same Schedule VDA reporting.

Transfer to another party for consideration. Any transfer of the asset for value, including private transfers settled outside a platform, is a taxable event. The platform's TDS deduction may not apply in such cases, but the Section 115BBH tax liability still applies.

What does not count as a taxable transfer

The following activities are not taxable transfer events under Section 115BBH. They may have other tax consequences (a deposit may create a record visible in the AIS, for example), but they do not trigger the 30 percent rate.

Purchasing crypto with INR. Buying Bitcoin (or any VDA) with INR is an acquisition, not a transfer. The purchase establishes the cost basis for the units acquired. The cost basis is what will be used when the units are eventually sold or swapped, at which point the transfer event occurs.

Transferring crypto between accounts you control. Moving Bitcoin from your platform account to your own self-custody wallet, or between two accounts at the same platform held in your own name, is not a transfer for tax purposes. Beneficial ownership has not changed. The cost basis carries from one location to the other.

Holding crypto in a wallet or on a platform. Simply holding a crypto position, regardless of how the price moves while you hold, is not a taxable event. Mark-to-market is not applied to crypto holdings under the Indian tax framework. The tax applies at the moment of transfer, not on the position's interim valuation.

Depositing INR into a platform account. A platform deposit is a movement of INR, not a transfer of a VDA. The deposit does not trigger Section 115BBH.

Withdrawing INR from a platform account. An INR withdrawal is a movement of INR back to your bank account. It is not a transfer of a VDA. The Section 115BBH transfer event happened earlier, when the crypto was sold for the INR that you are now withdrawing.

The crypto-to-crypto swap: the most common surprise

The crypto-to-crypto swap is the scope question that most investors get wrong. The Section 115BBH event occurs at the swap, even though no INR has changed hands. The mechanic is worth walking through with a concrete example.

An investor bought 0.1 Bitcoin in May for ₹4,00,000. The cost basis for that 0.1 BTC is ₹4,00,000. In September, the investor swaps the 0.1 Bitcoin for some quantity of Ethereum, at a time when the Bitcoin is worth ₹5,50,000 and the Ethereum acquisition is therefore for ₹5,50,000 worth.

Section 115BBH applies on the Bitcoin side at the moment of the swap. The transfer event is treated as a sale of the Bitcoin for ₹5,50,000 (the market value of what was received). The taxable gain is ₹5,50,000 minus the ₹4,00,000 cost basis, which is ₹1,50,000. The tax on this gain is 30 percent flat plus cess and surcharge as applicable.

The Ethereum side establishes a new cost basis of ₹5,50,000 (the value at acquisition). When the investor later sells the Ethereum or swaps it again, Section 115BBH will apply on that side too, with the ₹5,50,000 as the cost basis to be compared against the next transfer's sale consideration.

Two implications. First, the investor's tax liability accrues at the swap, not at the eventual INR sale. The platform's TDS deduction may apply at the swap, depending on the platform's processing and the threshold conditions. Second, the cost-basis record needs to capture not only INR-purchased acquisitions but also crypto-acquired-via-swap acquisitions, each with its own cost basis derived from the swap-time market value.

Investors who actively trade between crypto assets often accumulate a meaningful tax liability through swaps even when they have not converted anything to INR. The pattern is structurally different from equity trading, where intra-portfolio rebalancing between equity assets typically does not produce tax events until eventual sale.

The edge categories: separate tax treatment

Five edge categories deserve specific treatment because they sit at the boundary of Section 115BBH and other parts of the tax framework.

Staking rewards. Crypto received as a reward for staking a protocol's token is typically taxed at receipt under "income from other sources" at the investor's applicable slab rate. The cost basis for the staked-reward crypto is the market value at receipt. When the investor later transfers the staked-reward crypto, Section 115BBH applies on the gain over that cost basis. The investor pays slab-rate tax at receipt and Section 115BBH at subsequent transfer.

Airdrops. Crypto received as an airdrop is treated as receipt of property. The market value at receipt is taxed under "income from other sources" at slab rate. The cost basis is the receipt-time market value. Subsequent transfer is taxed under Section 115BBH on the gain over that cost basis. The treatment parallels staking rewards.

Mining income. Crypto received through mining is treated as either business income or "income from other sources" depending on the scale and structure of the mining activity. The market value at receipt is taxed at the applicable rate. The mined units carry a cost basis of the receipt-time value. Subsequent transfer is taxed under Section 115BBH.

Gift of crypto. The recipient of a crypto gift may have gift-tax exposure depending on the relationship and the value, per the standard Indian gift tax framework. For gifts between specified relatives (spouse, parents, siblings, lineal descendants), the gift is typically not taxable for the recipient, and the cost basis of the giver carries to the recipient. When the recipient later transfers the gifted crypto, Section 115BBH applies on the gain over that carried cost basis. Gifts between non-specified parties may be taxable for the recipient under the slab rates as "income from other sources," with the cost basis carrying as before.

Inheritance. Inheriting crypto is not a taxable event for the heir. The heir steps into the predecessor's tax position: the cost basis carries from the predecessor, and the holding period (for the limited purposes where holding period matters elsewhere in the tax framework) carries as well. When the heir later transfers the inherited crypto, Section 115BBH applies on the gain over the carried cost basis. The inheritance itself does not produce a transfer event.

Loss-making transfers. A transfer at a loss is still a transfer for reporting purposes. The investor is required to report the transfer in Schedule VDA. The loss, however, is disallowed for set-off purposes under Section 115BBH's no-set-off rules. The transaction appears in the filing but produces no tax-reducing effect.

For the foundational read on the Section 115BBH structure itself, see Section 115BBH explained. For the VDA definition that determines whether an asset is in scope, see what is a VDA. For the TDS mechanism that runs alongside the 30 percent rate, see how TDS on crypto works. For the wider tax framework, see the complete 2026 tax guide.

The scope is the discipline

A clean reading of what counts and what does not is what makes Indian crypto tax filings cleanly. Investors who keep a per-transaction cost-basis record, who recognise crypto-to-crypto swaps as taxable events, and who treat staking, airdrop, and mining receipts as separate income events at receipt are positioned to file Schedule VDA accurately. The scope rules look complex on first read but reduce to a clean discipline once they are operationalised through clean record-keeping. The complexity is one-time; the discipline is the structural answer.

Frequently asked questions

Does a crypto-to-crypto swap count as a taxable event?

Yes. A swap of one VDA for another (for example, swapping Bitcoin for Ethereum) is treated as a transfer of the first asset under Section 47A of the Income Tax Act. Section 115BBH applies on the swap, with the sale consideration for the first asset measured at the market value of the second asset received. The taxable gain is computed against the first asset's cost basis. The second asset is treated as a fresh acquisition with its own cost basis equal to its market value at the swap. This rule catches investors who actively rotate between crypto assets without converting to INR.

Are staking rewards taxed at 30 percent in India?

Not at receipt. Staking rewards are typically taxed under "income from other sources" at the investor's slab rate at the time of receipt, with the market value at receipt as the taxable amount. The Section 115BBH 30 percent rate applies to the subsequent transfer of the staking-reward crypto, computed on the gain over the receipt-time cost basis. The treatment is therefore two-stage: slab-rate tax at receipt, Section 115BBH at later transfer. The same two-stage treatment applies to airdrops and mining income.

Do I pay tax when I transfer crypto between my own wallets?

No. A transfer between two accounts you control (whether between a platform account and a self-custody wallet, or between two platform accounts held in your own name) is not a transfer for tax purposes. Beneficial ownership has not changed. The cost basis carries from one location to the other. The Section 115BBH transfer event occurs when there is a change in beneficial ownership through a sale, swap, payment, or other transfer for consideration.

How are crypto airdrops taxed in India?

Airdrops are treated as receipt of property. The market value of the airdropped crypto at the time of receipt is taxed under "income from other sources" at the investor's slab rate. The receipt-time market value becomes the cost basis. When the investor subsequently transfers the airdropped crypto, Section 115BBH applies on the gain over that cost basis. An investor who receives an airdrop and immediately sells it will face slab-rate tax on the receipt value and a small Section 115BBH event for any price difference between receipt and sale.

Is inheriting crypto a taxable event?

No. Inheriting crypto is not a taxable event for the heir. The heir steps into the predecessor's tax position: the cost basis of the predecessor carries to the heir. When the heir later transfers the inherited crypto, Section 115BBH applies on the gain over that carried cost basis. The inheritance itself is not a transfer event under the Income Tax Act. The heir's later activity with the inherited crypto is taxed in the normal way.

Disclaimer

Crypto investments are subject to market risk and volatility. Past performance is not indicative of future returns. This is not investment advice. Please consult a qualified financial advisor before investing.

*Written by Rudra, Head of Marketing, Qatobit.*