It is not rare for people who invest in Bitcoin, Ethereum, or any other Virtual Digital Asset (VDA) to always ask the same question: how to avoid crypto tax in India? Since 2022, the tax on cryptocurrency in India has become increasingly more challenging. A 30% tax on profits, plus a 1% TDS, applies; yet, many investors are left in the dark regarding the legality of the situation.
In this guide, we will not discuss the more audacious loopholes and outdated gimmicks. Instead, we will outline seven legal measures to minimise unnecessary expenses on crypto taxes for 2025, fully supported by government policy, real-life examples, and practical advice. A flat 30% tax on cryptocurrency profits may make things more difficult for you if your monthly salary is ₹14,850. As a result, it’s critical to comprehend how to legally reduce cryptocurrency taxes.
While this guide explains crypto taxes, remember that the technology underpinning
it—Blockchain Technology Beyond Crypto—is rapidly growing and changing how digital assets are tracked and managed.
Practical Guide: How to Avoid Crypto Tax in India Without Breaking Laws
Flat 30% Tax on Profits
The profit earned by a business that mines cryptocurrency does not constitute business revenue, but a clear tax calculation on crypto in India ensures correct compliance.
The 1% TDS Rule
As of July 2022, every sale of cryptocurrency is taxed at 1% TDS as per Section 194S, which is automatically deducted when calculating total tax dues.
No Loss Adjustment Allowed
Despite the losses you might incur from Ethereum, the profit you get from Bitcoin is still taxed, meaning there is a 30% tax on crypto, even with a loss. You are unable to offset any crypto losses against other income earned from employment or self-employment.
7 Legal Ways to Avoid Crypto Tax in India Safely
Impact of Crypto Tax on Low-Salaried Earners (₹14,850 Example)
- Monthly salary = ₹14,850 → Annual = ₹1,78,200
- Crypto profit = ₹50,000 → Tax = 30% = ₹15,000
- Total taxable income = ₹1,78,200 + ₹50,000 = ₹2,28,200
- Legal strategies (gifting, loans, timing, deductions) low-salary earners के लिए भी applicable हैं।
Gifting Crypto to Family
You are allowed to bestow a monetary gift in the form of cryptocurrency to immediate descendants such as your spouse, parents, children, or siblings. Gifts from family members are gifts. If your family members decide to sell the gift, they will incur a 30% tax, as they will likely be in the lower taxation slab.
Taking a Loan Against Crypto
If you take out a loan against your cryptocurrency, you do not need to sell it to pay the collateral. This is a technique many investors researching how to avoid crypto tax in India use, as there is no ‘transfer’ of crypto.
Holding & Wallet Transfers
The great news is that you don’t owe any tax just for keeping your cryptocurrency or moving it between your own accounts. For example, transferring coins from an exchange like Binance to your personal, secure wallet doesn’t trigger a tax bill, making it a simple, legal way to avoid crypto tax in India until you decide to sell or trade the asset.
Giving family members cryptocurrency as a gift:
You can give your parents or spouse cryptocurrency if you make ₹14,850 a year. This will lower your overall tax and provide slab benefits.
Timing Your Crypto Sales
To maximise profits, consider staggering your sales across two separate fiscal years. This mainly works if you predict where the gain will be made, try to sell before March 31, and sell the next batch after April 1. This will simplify your income and lower the taxable income, placing you in the higher tax bracket.
Using Staking & Mining Rewards
Coins received from staking or mining are taxable as income and are taxed at the standard slab. If you fall under the lower tax bracket, the 30% won’t apply to you. If you decide to sell these coins in the future, you will be subject to the flat tax.
Exploring ETFs & Other Assets
Some smart investors choose to buy global crypto tax funds or Bitcoin ETFs, which follow the entire 360 Crypto Stock Market, because these are often taxed at lower capital gains rates instead of the flat 30% VDA tax.
Leveraging General Deductions
Although crypto gains are not eligible for tax deductions, some income can be sheltered from tax by claiming investments covered under Section 80C (PPF, ELSS, LIC) and Section 80D (Medical Insurance). Taxable income not exceeding ₹5 lakh is eligible for the rebate under Section 87A.
Even when there is a Sudden Crypto Market Fall, you must still carefully use legal tax methods; selling at the wrong time can easily change how much tax you owe on profits or losses.
Making Use of General Deductions:
The 80C and 80D deductions are available to low-income earners. For instance, a salary of ₹14,850 per month will have its taxable income reduced by deductions.
Pros & Cons of Legal Tax Strategies Every Investor Should Weigh
Pros
- 100% legal and safe under Indian laws
- Reduce the total tax burden smartly
- Avoids the problem of low-income high crypto tax by redistributing gains within family slabs
- Alternative assets (ETFs) provide flexibility
Cons
- No full exemption from the 30% crypto tax
- Needs careful planning & documentation
- Clubbing rules may apply to spouse gifts
- Still subject to global tax reporting (OECD CARF)
Crypto Tax vs Regular Income Tax in India – Key Differences Explained
| Category | Crypto Income (VDAs) | Regular Income (Salary/Stocks) |
| Tax Rate | Flat 30% on profits | Slab-based (5%–30%) |
| Loss Set-off | Not allowed | Allowed (capital gains, business) |
| TDS | 1% on every sale | Usually not applicable |
| Holding Period Benefit | No benefit | LTCG & STCG rules apply |
| Example | Profit on Bitcoin = 30% tax | Profit on stocks may be 10–15% LTCG |
New Enforcement & Govt Updates (2025) You Must Know
Budget 2025: Strict Rules on Undisclosed Crypto
Under the Union Budget 2025, any crypto holdings that are not declared will be considered “black money” and subjected to an even higher penalty rate.
CBDT’s AI-Driven Monitoring
The CBDT now employs AI-based software, such as Project Insight, to identify problems with TDS and ITR mismatches (Moneycontrol, August 2025).
Global Crypto Reporting (OECD CARF)
By 2027, offshore cryptocurrency accounts will be accessible to the Indian government after India joins the OECD Crypto Asset Reporting Framework (CARF).
Filing ITR for Crypto Income (AY 2025–26) – Step-by-Step Guide
Choosing the Right Form
- ITR-2 must be filed if you are an individual investor.
- ITR-3 is to be filed if you do business in crypto trading.
Schedule VDA Reporting
ITR forms now include a Schedule VDA, which requires that every transaction, along with its respective date, cost, selling price, and profit and loss, be thoroughly captured. Hence, the need to learn how to avoid crypto tax in India legally becomes even more paramount.
Reconciling TDS Credit
Always review Form 26AS to request a 1% TDS refund that the exchanges have withheld. If not, you run the risk of overpaying taxes.
Conclusion
In 2025, the strategy to avoid taxes on crypto in India will focus on tax planning, rather than loopholes. If you are wondering how to avoid crypto tax in India, the answer lies in legally using gifts, loans, timing, and deductions to lower your taxable income.
The Indian government is transparent: Non-compliant Investors are at risk; however, those who utilise the seven safe methods to reduce their liability are in a much better position.
Pay ₹14,850 per month. Even if it is earlier, crypto tax can be reduced through legal tactics (gifting, loans, timing, deductions).
FAQs
Q1. Is Binance P2P taxable in India?
All Binance P2P trades are taxable. The buyer has TDS deducted at 1%, which must be reported in the Income Tax Return (ITR).
Q2. Is income from cryptocurrency taxable under which head?
Income earned through cryptocurrency is taxed at the rate of 30% of Income from Other Sources, as mentioned in Section 115BBH.
Q3. What if my salary is ₹14,850 — does the ₹14,850 salary crypto tax rule still apply?
Your crypto earning tax on total income is 30%, with no exemptions; however, the 80C/80D deductions can reduce the final liability. Crypto tax 30% = ₹15,000 if the monthly salary is ₹14,850 and the cryptocurrency profit is ₹50,000. Depending on the pay slab, taxes will change. Gifting and loan strategies, as well as 80C/80D deductions, can help lower the overall tax.
Q4. How is tax on crypto staking in India calculated?
When staking rewards are received, they are taxed at the normal slab rate. The sale of staking rewards is subject to a 30% tax.
Q5. What is the truth about the crypto futures tax loophole in India?
Officially, there are no loopholes. The tax on all crypto futures profit is 30% and is a flat tax. The government’s AI systems can easily trace mismatched reporting.
Disclaimer
All the information on this website 360storyline is for educational and informational purposes only. We share updates on the stock market, crypto, finance, commodities, and success stories–but this is not investment advice. Please talk to a financial advisor before making any investment decisions. Markets have risks–there can be profit or loss. By using this website, you fully accept and agree to this Disclaimer.
I am a stock market and finance researcher with a strong interest in Indian equities. focuses on analyzing penny stocks, multibagger opportunities, and market trends to provide simple and practical insights for investors. Through my research, My aims to help readers understand the stock market better and make informed financial decisions.
