Selling Bitcoin? Be Aware of the Tax You May Owe
In India, Bitcoin is considered a Virtual Digital Asset (VDA) and is taxed under special rules introduced by the government. When Bitcoin is sold, swapped for another cryptocurrency, or even used to buy something, it is treated as a taxable transaction. The income from selling Bitcoin is taxed at a flat 30% rate, which applies to all profits, no matter how long Bitcoin is held. On top of this, a 4% health and education cess is added to the tax bill. Depending on total income, additional surcharge rates may also apply.
Apart from this 30% tax, the government also charges a 1% Tax Deducted at Source (TDS) on every transaction involving the sale or swap of Bitcoin, if the value exceeds ₹10,000 in a financial year. The TDS is collected automatically by crypto exchanges at the time of the transaction. This deduction is made whether or not there is a profit. This means that even if Bitcoin is sold at a loss, the 1% TDS will still be deducted from the transaction value.