Crypto Beginner

Top 5 Ways to Save Crypto Taxes in India

crypto tax saving

Key Takeaways

  • It's better to look to save on taxes rather than avoid them.
  • Holding long-term helps save on capital gains taxes.
  • Investing in crypto derivatives based outside India increases indirect exposure to crypto without really investing in coins.

Crypto is unregulated in India, but taxes apply to them now. Taxes aren’t a bad thing. They help you contribute to your nation’s wealth, infrastructure, and future. But it is important to keep saving up for our own personal future, too. Do you know there are ways to save on the tax on your crypto gains?

Why learning how to save on crypto tax instead of avoiding it is important

First things first, it is never wise to “avoid” your tax liabilities. Some think that using decentralized exchanges is a way out of paying tax money. But decentralized exchanges can be complicated to use, and you will have to bear all the risks involved on your own. More importantly, in the end, when you convert your gains to fiat, you will end up having to pay tax anyway. So using a decentralized exchange only helps delay your taxes; there are no long-term benefits.

In any case, as citizens, it is our responsibility to follow the law and pay our dues diligently.

It’s a better idea to focus on how you can save taxes—that is, not pay unnecessary taxes when you don’t really have to—rather than avoid them. Toward that end, let’s start by understanding how these taxes work.

What taxes apply to cryptocurrency in India?

The Union Budget for the financial year 2022–23 introduced taxes on crypto under the Income Tax Act. The Act defines Virtual Digital Assets (VDAs) as:

“…any information or code or number or token (not being Indian currency or foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account including its use in any financial transaction or investment, but not limited to investment scheme; and can be transferred, stored or traded electronically…”

The Act thus imposes a tax on all VDAs, which are defined to include NFTs. Further, it specifies that the government could also decide to include other assets within its purview if and when required.

Should you own any of the assets mentioned under the act, you will be taxed in the following ways:

  • Starting from 1 April 2022, you will have to pay taxes on any profits you make from crypto and other VDAs in the financial year 2022–23.
  • You will not be allowed to offset the gains against any losses you incur in this period. So if you incur a loss of $13 on a Bitcoin trade, for instance, you cannot offset it against the $40 gains from an XRP trade and just pay taxes on $27. You will nevertheless have to pay the full 30% tax on the XRP gains.
  • Crypto gains can’t be offset against income from any other head either (mutual funds, assets, property, etc.).
  • A 1% Tax Deduction at Source (TDS) is also applicable to sellers, irrespective of whether they profit or lose from the sale, from 1 July 2022. When the sale amounts to less than 10,000 annually or involves a low liquidity asset, though, the seller will be exempted. Read more about this here.

Tips to save tax on cryptocurrency in India

As an investor, chances are you may not want to pour as much as 30% of your gains into taxes. That is a huge amount, after all, and it is your hard-earned money. So here are a few ways to save on taxes.

Invest without buying

Contrary to popular belief, you don’t have to buy cryptos to profit from their growth. Indirect exposure to crypto is an option. There are various global investment firms that allow you to invest in assets like mutual funds and Exchange-Traded Funds (ETFs) that are derivatives of crypto. In essence, you’re only buying an international investment product that’s based on crypto—not crypto itself. Such indirect exposure can lower your tax liability.

Here are some options you could look up to start with:

Keep the gains in stablecoins

Another way to save tax on crypto is learning about stablecoins and their many advantages. Stablecoins are less volatile than other crypto like Bitcoin and Ethereum since their values are pegged to either fiat money, exchange-traded commodities, or another crypto. 

You can keep the gains in stablecoins by converting your existing crypto holdings into stablecoins. You can do this on various crypto exchanges that support stablecoins, such as Tether (USDT), USD Coin (USDC), or Dai (DAI). By converting your holdings into stablecoins, you can protect your gains from volatility.

However, it is important to note that gains from crypto transactions are subject to taxation in most jurisdictions, regardless of whether they are held in stablecoins or other crypto. With stablecoins, you are less likely to suffer a long-term capital loss.

Opt for crypto salary

As cryptos are becoming popular, crypto salaries has gained momentum among crypto enthusiasts. Crypto salary is a form of payment for work or services made in crypto rather than traditional fiat currency. The concept has gained traction among a section of technology and blockchain-related companies. 

Some benefits of receiving a crypto salary include increased privacy and financial freedom, the ability to transact globally without exchange fees or delays, and the potential for crypto to increase in value over time. Moreover, crypto salary is especially beneficial for Indians. Let’s understand how. In India, the profit earned from trading crypto is taxed at 30%. However, crypto received as a salary is not subject to this high tax rate as it falls under the “income from salary” tax head.

Choosing the right exchange

Choosing the right crypto exchange is a must-do for crypto investors. It’s important to do research and consider all the factors before deciding on a crypto exchange. This is a great hygiene check for your portfolio that will also help you save on crypto taxes

Besides, tax laws around crypto vary significantly depending on where you live. It’s essential to choose an exchange that is compliant with crypto regulations. 

For instance, global exchanges operating out of India do not follow Indian regulations concerning TDS deduction and record keeping. Indian crypto investors must comply with applicable legislation in India. Keeping this in mind, Indian crypto traders should choose an exchange that has put in place requisite legal safeguards like mandatory KYC and declaring taxes. 

Recovering or offsetting the 1% TDS

We have already discussed that when a crypto trader sells crypto, they must deduct and withhold 1% of the transaction value as TDS, which is then paid to the government. TDS reflects a portion of the assessee’s already paid income tax, which can be offset against future income tax and balance tax burden. 

If you sold your crypto this year, the government would have taken 1% of your earnings as tax. But if you owe taxes on your crypto earnings at the end of the year, you can use this 1% to offset that amount. If you don’t owe more taxes, you can get the 1% back by declaring the same.


Investing in crypto has become one of the hottest trends in the global investment market. Decentralized technologies are making adoption headway, especially in institutions, by governments. However, the taxes on crypto are still pretty high in countries like India. Sure, taxes do take crypto one step further in the regulation game, but when the tax is as high as 30%, it’s understandable if you want to only pay how much you absolutely have to.


Are taxes on crypto gains beneficial?

Taxes on crypto gains can be beneficial for India as they provide revenue for the government and promote tax compliance. However, a balanced approach is necessary to avoid hindering crypto adoption.

How can I save on crypto gains tax?

You can potentially save on crypto gains tax in India by holding investments for the long term (over 3 years) to qualify for the lower long-term capital gains tax rate, using tax-saving investment tools like Section 80C, or consulting a tax professional for personalized advice.

Can tax planning optimize crypto profits?

Tax planning can optimize crypto profits by reducing the tax burden and maximizing after-tax returns. Strategies such as offsetting gains with losses, using tax-efficient investment vehicles, and understanding tax implications can be beneficial.

How can I reduce tax on crypto profits?

To reduce tax on crypto profits in India: hold for 3+ years, use tax-loss harvesting, opt for tax-saving investments, and seek expert advice.

What are the common crypto tax-saving strategies?

Common crypto tax-saving strategies in India include holding investments for over 3 years for lower long-term capital gains tax, using tax-loss harvesting, utilizing tax-saving investment tools, and consulting tax experts.

Is tax-saving applicable globally?

Tax-saving strategies vary by country due to different tax laws and regulations. What may be considered a tax-saving strategy in one country may not apply or have a different impact in another. It’s essential to consider the specific tax rules in each jurisdiction.

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