Crypto investors and traders, Crypto is no longer in the “grey zone” in India. Both Income Tax and GST on cryptocurrency apply in 2025.
Table of Contents
What Is a VDA (Virtual Digital Asset)?
Under Section 2(47A) of the Income Tax Act, VDAs include:
- Crypto coins like Bitcoin, Ethereum, Solana
- NFTs (Non-Fungible Tokens) – like digital art, music, gaming items
- Tokens or virtual currencies used on apps or exchanges
These are digital assets you buy/sell online, and now government says – “If it’s business, tax will apply!”
Why Is GST Applied on Crypto in 2025?
The government says:
- Many people are doing crypto trading like business
- Crypto exchanges are earning commissions and fees
- So, like any business or service – GST must be paid
Think of crypto exchanges like Zerodha or Upstox – they charge brokerage. Same way, GST applies on crypto service charges.
GST Rates on Crypto Services (2025)
| Crypto Activity | GST Rate | Who Pays? |
|---|---|---|
| Buying/selling crypto via Indian exchange | 18% | On exchange fee |
| NFT platform charges | 18% | Paid by buyer/seller |
| Wallet transfer for business (not personal use) | 18% | Paid by the user |
| Crypto mining (commercial scale) | 18% | On mining service income |
| Using foreign crypto platforms (Binance etc.) | 18% (RCM) | You pay under RCM |
Personal buying/selling (just as investment) has no direct GST, but services used to trade are taxed.
Simple Example – GST on CryptoCurrency Trade
Let’s say:
- You buy ₹1,00,000 of Bitcoin on WazirX
- WazirX charges 1% trading fee = ₹1,000
- GST @18% on ₹1,000 = ₹180
So your total cost = ₹1,00,000 + ₹1,000 + ₹180 = ₹1,01,180
Crypto vs GST vs Income Tax – What’s the Difference?
| Tax Type | What is taxed? | Rate | When to pay? |
|---|---|---|---|
| Income Tax | Profit from buying & selling crypto | 30% | While filing ITR |
| TDS | On each sale (deducted by exchange) | 1% | Deducted at source |
| GST | On services by platform/exchange | 18% | Monthly, by the service giver |
You don’t pay GST on crypto coins directly, but on the services used.
GST for Crypto Startups and Businesses
If you are:
- Running a crypto exchange
- Making a crypto payment app
- Operating a NFT marketplace
You must register for GST and file regular returns:
- GSTR-1
- GSTR-3B
- Payment of collected GST
Non-compliance can lead to heavy penalties and even freezing of bank accounts!
GST on International Crypto Platforms (Reverse Charge)
If you use platforms like:
- Binance
- KuCoin
- OKX
And they don’t have a GST number in India → YOU (the user) must pay 18% GST under Reverse Charge Mechanism (RCM).
Using Foreign Crypto Exchanges – GST via RCM
Reverse Charge Mechanism (RCM)
If you use a foreign exchange like Binance or KuCoin, and they don’t have a GST number in India, then:
- You (Indian user) are responsible for paying 18% GST
- It will be considered an import of online service
🧾 Example:
- Binance charges ₹2,000 as fee
- You must pay ₹360 GST (18%) under RCM to the government
Most users are unaware of this – but this is 100% legally enforceable in India.
GST Council Updates 2025
- Government may bring crypto trading fully under financial services
- Crypto exchanges must now give invoices with GST
- GST officers tracking unregistered foreign service use
Penalties for Ignoring GST on Crypto
🚨 If you fail to pay GST:
- Penalty = 10% of unpaid GST, minimum ₹10,000
- Interest @18% per annum on unpaid amount
- GST Officer may issue Show Cause Notice (SCN)
- In serious cases – bank account can be frozen
🧾 Example: A crypto trader using Binance for ₹20 lakh turnover but not paying RCM GST may get audited and fined heavily.
FAQs – Crypto & GST in 2025
Q1. Do I pay GST on buying Bitcoin?
Ans: Not on Bitcoin itself, but yes on the platform’s service charges.
Q2. Is GST required if I trade only once or twice?
Ans: No GST on personal trading, only if it’s done regularly like business.
Q3. What is Reverse Charge in Crypto?
Ans: If you use a foreign platform that doesn’t pay GST in India, YOU have to pay it.
Q4. Do NFT artists pay GST?
Ans: Yes, if selling NFTs professionally, 18% GST applies on income.
Q5. I use Binance. Do I need to pay GST under RCM?
Ans: Yes, if you’re using Binance as a business or high-volume trader, you must pay 18% GST under Reverse Charge.
Summary
| Activity | GST Applicable? | Rate |
|---|---|---|
| Personal crypto trading | No | 0% |
| Exchange/platform fee | Yes | 18% |
| NFT sales (business/professional) | Yes | 18% |
| Use of foreign platform | Yes (RCM) | 18% |
Final Words – Stay Legal, Stay Safe
Crypto is now serious business. Don’t just invest, file your taxes properly. GST is now part of every trade – and ignoring it can lead to legal notices or fines.
Visit TaxGiveIndia.com – India’s trusted portal for ITR, GST, and business tax help.