How trading, swaps, mining, staking, airdrops and gifts are each taxed under the VDA regime
The flat 30% under Section 115BBH applies to the transfer of a VDA, but different crypto events reach that point differently. A straight sale or a crypto-to-crypto swap is a transfer taxed at 30% on the gain (each leg of a swap counts). Mined coins have a nil cost of acquisition, so when you transfer them the whole value is taxed, and mining costs are not deductible. Staking rewards and airdrops are taxable as income at their fair value when received, and then any later gain on transfer is taxed at 30%. Receiving crypto as payment for goods or services is business income at fair value. And gifted crypto can be taxable in the recipient's hands.
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Guidance, not advice. We explain the rules, we don't assess your situation. Always seek financial or tax advice from your accountant, or contact Income Tax Department. Read our editorial scope →
Trading and crypto-to-crypto swaps
A sale of crypto for rupees is a transfer, taxed at 30% on the gain (sale value less cost of acquisition). A crypto-to-crypto swap is also a transfer: exchanging one VDA for another is treated as disposing of the first asset, so the gain on it is taxed at 30%, even though you never converted to rupees. Each leg of active trading is therefore a taxable event, and the 1% Section 194S TDS applies to transfers above the threshold.
Mining, staking and airdrops
These are where people get caught. For mined coins, the cost of acquisition is treated as nil, so when you later transfer them the entire value is taxed at 30%, and the cost of mining (hardware, electricity) is not deductible. Staking rewards and airdrops are generally taxable as income at their fair market value when you receive them; that value then becomes the cost of acquisition, and any further gain when you transfer them is taxed at 30%. So receiving free or reward tokens is not tax-free, it is income at receipt.
warningMining infrastructure costs (rigs, electricity) are not deductible, and mined coins have a nil cost of acquisition, so their whole value is taxed at 30% on transfer. Staking and airdrop tokens are taxed as income when received, not only when sold.
Crypto as payment, and gifts
If you accept crypto as payment for goods or services, that is business income at the fair value on the date received, taxed under your normal business head (and a later transfer of the coin is then a 30% VDA event). Gifts of crypto can be taxable too: a VDA received as a gift is taxable in the recipient's hands where it falls within the gift provisions (subject to exemptions such as gifts from close relatives or on occasions like marriage). So both accepting crypto in trade and receiving it as a gift have tax consequences.
tipIf you accept crypto for your work, record its rupee fair value on the day received, that is your business income, and also becomes the coin's cost of acquisition for the eventual 30% VDA transfer.
Income-tax Act 1961 s.115BBH (transfer of VDA, incl. crypto-to-crypto swaps) (re-enacted in the Income-tax Act 2025)
Income-tax Act 1961 s.56(2)(x) (gift of VDA taxable in recipient's hands, with exemptions)
Income-tax Act 1961 s.194S (1% TDS on transfers)
Frequently asked questions
Is swapping one crypto for another taxable?+
Yes. A crypto-to-crypto swap is treated as a transfer of the first asset, so the gain on it is taxed at 30% under Section 115BBH, even though you never converted to rupees. Each leg of active trading is a taxable event, and the 1% Section 194S TDS applies to transfers above the threshold.
How are mined coins taxed?+
Mined coins are treated as having a nil cost of acquisition, so when you transfer them the entire value is taxed at 30%. The cost of mining, such as hardware and electricity, is not deductible. This makes mining one of the harshest cases under the VDA regime, since there is effectively no cost to offset against the sale value.
Are staking rewards and airdrops taxed?+
Generally yes, as income at their fair market value when you receive them, not only when you sell. That receipt value then becomes the cost of acquisition, and any further gain when you transfer the tokens is taxed at 30% under Section 115BBH. So free or reward tokens are taxable at receipt, then again on any later gain.
Do I pay tax if I accept crypto as payment for my work?+
Yes. Crypto received as payment for goods or services is business income at its rupee fair value on the date received, taxed under your normal business head. That value also becomes the coin's cost of acquisition, so a later sale or swap of the coin is a separate 30% VDA transfer on any further gain.