4 mins

5 Hacks That Could Help You Save Taxes On Crypto In India

Alene VonRueden
March 15, 2022

Now that your chance to book profits before March 31, 2022, has gone, your crypto investments will be subject to the whopping 30% tax that the Indian Government has imposed on virtual digital assets. If you don’t know what we’re talking about, be sure to read our in-depth breakdown of the taxes on crypto here.

With the soaring taxes on crypto, investors are looking for a solution to help them make the most of their investments without paying a huge chunk of their profits as taxes. The imposition of crypto tax in India has given no regard to losses, expenses, long-term assets, or even smaller investments. Someone who is earned Rs. 500 from crypto will also have to pay the taxes, and someone who is earning Rs. 50,000 from crypto will also have the same percentage of taxes.

With the 1% TDS imposition of all kinds of crypto transactions, it is virtually impossible not to disclose crypto income.

While some investors are of the opinion that the government will relax some rules related to crypto taxation, others have accepted their fate and are now looking for ways to bring down the amount of taxes on their crypto income.

Keeping this and the limitations of crypto taxes in mind, here are 5 simple hacks that you can incorporate to try and reduce your crypto tax burden while staying in the ambit of proper disclosures.

Hack #1 - Hold on

Crypto tax can only be calculated when you book profits. If you invest today, you will have to pay a 1% TDS on the transaction. However, you are essentially not booking profits until you sell your cryptocurrency and convert it into fiat money and, therefore, cannot be taxed. Holding an asset does not equate to generating profits, even if it increases in value. Cryptocurrency is one such asset.

Once the taxes come down or the government provides some relief on the same, for example, a reduced burden for long-term assets, you could sell them and save taxes.

The risk here, of course, is the volatility of the crypto market and the fact that the imposition of taxes on crypto does not equate to cryptocurrency becoming legal. If this is a risk you can bear, then holding on to your crypto assets is an excellent solution to avoid the tax liability for a while.

Hack #2 - Minimize expenses

Unlike other assets, expenses incurred to make profits from cryptocurrency cannot be claimed as an expense to reduce the tax burden. This makes it extremely challenging for investors who pay high gas fees to book profits. If their expenses cover more than 70% of the profits, they are essentially not making any money from crypto.

For example, If person A buys Ether for Rs. 10,000 and pays Rs. 1000 as the gas fee, they will now also have to pay Rs. 100 (1%) towards TDS. Then, when they try to sell it at Rs. 15,000, they will be charged Rs. 150 as TDS again (1% of Rs. 12,500) and pay a gas fee of another Rs. 1000. By now, they have incurred expenses of Rs. 2,000 as gas fee alone. While Rs. 3,000 (Rs. 5,000 profit minus Rs. 2,000 gas fee) is a good amount to make in a day or even a couple of hours, their actual income now becomes:

TDS - Rs. 100+Rs.150 = Rs. 250.

Tax @ 30% plus surcharge and cess - Rs. 5,000 *30% = Rs. 1,500 + 4% = Rs. 1560.

Expenses = Rs. 2,000.

Total Actual profits = Rs. 5,000 - Rs. 250 - Rs. 1560 - Rs. 2,000 = Rs. 1,190.

So, without the tax, they would get Rs. 3,000, and because of the tax, their profit is reduced to less than half of what it could be, standing at Rs. 1,190.

Hack #3 - Book losses

The most prudent thing to do to reduce your tax burden right now is to book losses if you are sure you cannot make a profit from them. If you are making a good amount of profit from one crypto asset, but another crypto asset just won’t give you any profits, now would be the perfect time to sell it.


Virtual Digital Assets are taxed as a whole. If you have two or more investments in cryptocurrency while computing tax, it will be considered as one element. Even though you cannot offset your crypto assets' losses against your income from other sources, you can reduce your crypto losses against your crypto gains. This is a clear cut way of reducing your profits, thereby reducing your tax liability.

You can also repurchase the loss-making asset at a low value if you think it will make profits in the near future and hold it until the next financial year. Keep in mind that the 1% TDS will still be charged on every transaction, whether you make a profit or a loss. 

Hack #4 - Gift relatives

If you feel like you have an enormous tax burden accumulating, you can consider giving crypto as a gift to your relatives since this transaction will be completely free from crypto tax.

While this makes for a unique gift, the recipient of the gift will attract tax when they ultimate sell it, so ensure they are aware of this; otherwise, you will have to face some furious relatives!

That being said, you can definitely use your crypto assets as a unique way of avoiding expenditure on other items and gifting your crypto instead. Say you gift your sister wants a diamond ring worth Rs. 20,000. Instead, you gift her an NFT worth Rs. 20,000. Your expenditure, either way, would be the same. However, within a few months, the NFT’s value rose to Rs. 30,000, and your sister sells it. Now she can buy the diamond ring worth Rs. 20,000, pay the Tax of Rs. 9,360 (Rs. 30,000 * 30% = Rs. 9,000 + 4% surcharge and cess = Rs. 9,360) and treat you to a Starbucks with the remaining Rs. 640.

Hack #5 - Gifts of less than Rs. 50,000

What if you want to gift something to someone who is not your relative? The hack still works - with a small limitation. You will have to limit your gifts to Rs. 50,000 because if you are not gifting crypto to a relative, you can only indulge in tax-free gifting of up to Rs. 50,000. If you gift crypto of a higher value, it will be fully taxed.

Keep in mind that this Rs. 50,000 limit is for a year and not for a single transaction. So, share this article with your significant other or your friends and let them guess what they will get for their birthday this year!

Parting Thoughts

Though the taxes on crypto have proven to be a real game-changer, there is not much we can do as investors to avoid it while staying within the legal boundaries. However, as time goes on, we are bound to crack more ways of saving taxes unless the government decides to reduce the load in some ways.

With the rising popularity of crypto and related financial instruments, the government cannot ignore the massive amount of investments that have gone into the crypto space from regular Indian investors.

Another major hack for a seamless and hassle-free experience with crypto taxes is our tool Kuber Tax. Calculate your crypto taxes with ease using Kuber Tax so that you can spend less time wondering how much tax you have to pay and spend more time on trying out these hacks to save tax!

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