Advance Tax on Crypto Gains in India

India taxes income from Virtual Digital Assets under Section 115BBH of the Income-tax Act 1961, introduced by the Finance Act 2022 and effective from Assessment Year 2023-24.

The rate is a flat 30% plus applicable surcharge and 4% cess, regardless of your income slab. A separate provision, Section 194S, requires 1% TDS on the transfer of a VDA, in force since 1 July 2022.

When advance tax applies

If your total tax liability for the year, after deducting TDS, is ₹10,000 or more, you are required to pay advance tax in instalments during the year rather than a single payment at filing.

Crypto gains count toward this. Someone whose salary TDS fully covers their employment income can still fall into advance tax obligations purely because of a profitable crypto year.

The instalment schedule

Due date	Cumulative advance tax payable
15 June	15% of estimated liability
15 September	45% cumulative
15 December	75% cumulative
15 March	100% cumulative

Interest for shortfall

• Section 234B — where advance tax paid is less than 90% of the assessed liability, interest runs at 1% per month from 1 April of the assessment year until payment.
• Section 234C — where an individual instalment falls short of the cumulative percentage due by that date, interest at 1% per month applies for the deferral period on the shortfall.

The practical problem with crypto

Advance tax assumes you can estimate annual income reasonably early. Crypto gains do not cooperate: a gain realised in March could not have been anticipated in the June instalment.

Section 234C contains relief for certain categories of income that are inherently unpredictable, where the instalment is treated as met if the tax on that income is paid in the remaining instalments. Whether and how this operates for VDA income in a given case is a question worth putting to a chartered accountant rather than assuming — the interest cost of getting it wrong is modest but avoidable.

A workable approach

1. Compute tax on gains actually realised in each quarter rather than projecting the year.
2. Where TDS has been deducted under Section 194S on Indian exchanges, credit it — it reduces what remains payable.
3. On foreign exchanges where no TDS is deducted, the full liability sits with you, so the advance tax position is larger.
4. Set aside the tax on a realised gain at the time it is realised, rather than at the quarter end.

The last point is the one that prevents the most damage. Tax is owed on the rupee gain at the time of disposal; if those proceeds are redeployed into another position that then falls, the liability does not fall with it.

A worked example

Suppose you realise a gain of ₹10,00,000 in August. Tax at 30% plus 4% cess is ₹3,12,000. TDS at 1% of the transfer value has already been deducted on an Indian exchange — say ₹25,000 on a ₹25,00,000 transfer.

1. Liability after TDS credit: ₹3,12,000 − ₹25,000 = ₹2,87,000.
2. That exceeds ₹10,000, so advance tax applies.
3. By 15 September, 45% cumulative is due: ₹1,29,150.
4. By 15 December, 75%: ₹2,15,250 cumulative.
5. By 15 March, 100%: ₹2,87,000 cumulative.

Falling short at each date attracts Section 234C interest on the shortfall for the deferral period; falling short of 90% overall attracts Section 234B interest from 1 April of the assessment year.

Paying advance tax

Advance tax is paid through the income tax e-filing portal or authorised banks using Challan 280, selecting advance tax as the payment type and the correct assessment year. Keep the challan; the credit should reflect in Form 26AS, and a mismatch is easier to fix while the year is still open.

The common mistake

Many investors assume TDS covers their obligation because it appears on every trade. It does not. TDS is 1% of transfer value; tax is 30% of gain. On a profitable position, the gap between them is large, and it falls due in instalments through the year — not at filing.

Practically, treating tax as owed at the moment a gain is realised — and setting it aside then — is the approach that avoids both the interest and the harder problem of finding the cash in March after the proceeds were redeployed.

Related guides

• Crypto tax in India: the complete guide
• Crypto tax calculator for India
• Tracking crypto for Indian tax records
• Best crypto exchanges in India

This page is educational and not tax advice. Indian tax law changes and individual circumstances differ. Confirm your position with a qualified chartered accountant before filing.