What is the 70% Tax on Crypto in India?

The 70% crypto tax in India has been implemented as a penalty for those who do not declare their crypto income. The tax is different than the 30% income tax on crypto (under section) and the 1% TDS.

Why was the 70% tax implemented?

The Ministry of Finance under the Government of India holds the view that crypto trading should be discouraged for small retail and institutional traders. Further, there is a need to curb money laundering in the country, where cryptocurrencies provide an untraceable route for moving funds.

Therefore, to discourage the usage of cryptocurrencies, the government took harsh steps in 2022, implementing a 1% TDS and 30% flat tax on crypto gains.

For those who still avoided that tax through any means, a penalty has been levied under Section 158B of the Income Tax Act.

How to calculate crypto taxes in India?

There are three simple rules to calculate crypto taxes in India.

1. For those earning income from airdrops, trading, or other capital gains, there is a flat 30% tax on gains, with no possibility of losses.
2. 1% TDS is automatically collected on every transaction where you sell crypto to get INR.
3. For those who did not disclose crypto income, a 70% penalty tax has been levied on the transaction amount.

These taxes are in addition to the income tax that you pay.

You can easily get your trading data from the exchange where you have traded or transacted cryptocurrency.

Let us understand this with an example:

Suppose you make Rs. 1000 on crypto gains; here, the standard rate of taxation is Rs. 300. However, if you do not disclose your income, the penalty rate is Rs. 700.

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