India’s tax system treats salary income and profits from Virtual Digital Assets (VDAs) differently. Two people may each earn Rs. 12 lakh, yet their tax burden can vary depending on whether the income comes from employment or crypto trading.
Salary Income Follows Regular Tax Slabs
Salary is taxed under India’s normal income-tax framework. The applicable rate depends on the taxpayer’s total income and tax regime.
A salaried person may benefit from the standard deduction and eligible rebates. As a result, someone earning Rs. 12 lakh through salary can face a lower effective tax burden than someone earning the same amount from crypto profits.
Crypto Gains Face a Flat 30% Tax
Crypto profits fall under India’s VDA tax framework. Gains from the transfer of VDAs are taxed at a flat 30%, making the treatment stricter than that of salary income.
According to an X post shared by South Indian trader Nifty Wizard, the contrast becomes clear when comparing Rs. 12 lakh of salary income with Rs. 12 lakh of crypto profit. Although the income is identical, the tax outcome can be different.
Loss Rules Make Crypto Trading Tougher
The tax burden becomes more restrictive when traders make losses. India’s VDA framework does not allow losses from one VDA transfer to be adjusted against gains from other crypto transactions.
A trader can therefore suffer losses on some positions and still owe tax on profitable transactions elsewhere, reducing portfolio-level loss adjustment.
The 1% TDS Adds Cash-Flow Pressure
Eligible crypto transactions are subject to 1% tax deducted at source (TDS). For active traders, repeated deductions can lock up capital before final tax liability is calculated. The combination of a 30% tax and 1% TDS can make frequent trading less attractive.
Why the Difference Matters
India’s approach reflects a cautious stance toward digital assets. Salary is treated as employment income, while crypto falls under a separate VDA framework with tighter tax rules.
For Indian investors, the distinction affects trading frequency, cash flow, loss management and how much crypto profit is retained after taxes.
Also Read: Bitcoin Traders Cash Out: Can India’s GST Data Track Crypto Profit Spending?
Disclaimer : Crypto News India does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
