India taxes crypto more aggressively than almost any major economy. Yet for one of the fastest-growing segments of the market, crypto futures trading, the law still has not answered its most basic question: which tax regime actually applies.
This is not a technicality. The difference between the two possible answers can change a trader’s liability substantially, and the Central Board of Direct Taxes has issued no circular resolving it.
The legal framework was written for spots, not futures
India’s crypto tax architecture arrived with the Finance Act 2022. Section 2(47A) defined virtual digital assets. Section 115BBH imposed a flat 30% tax plus 4% cess on income from the transfer of a VDA. Section 194S added 1% TDS on VDA transfers.
Every one of those provisions was drafted with spot buying and selling in mind; someone purchases Bitcoin, holds it, sells it, and pays tax on the gain.
Crypto futures trading does not work that way. A futures contract is a derivative. You never take delivery of the underlying coin. You post margin, the contract tracks a price, and profit or loss settles without any cryptocurrency changing hands.
That gap is where the ambiguity lives, and it has persisted for more than four years.
Two defensible positions, no official answer
Traditional derivatives in India are taxed as business income at slab rates. Equity F&O on the NSE is treated as non-speculative business income, expenses are deductible, losses can be set off, and losses carry forward for eight years.
The VDA regime is the opposite. Under Section 115BBH, only the cost of acquisition is deductible. No trading expenses. No platform fees. No set-off against any other income, and under the prevailing interpretation, not even against gains on other VDAs. No carry-forward at all.
So which applies to crypto futures trading?
For USDT-settled perpetual contracts, the position is relatively settled in practice. Profit and loss are realized in USDT, which is itself a VDA under Section 2(47A). Most tax professionals treat these as VDA transactions, 30% plus cess, 1% TDS on settlement value, and no set-off.
For INR-settled contracts, a genuinely defensible alternative exists. Where a contract is margined and settled entirely in rupees, with no actual delivery of any cryptocurrency, there is a sustainable argument that no “transfer” of a VDA has occurred at all and that the income should therefore be taxed as speculative or non-speculative business income under normal provisions.
Neither position has been confirmed. There is no CBDT circular and no definitive judicial guidance. What exists is a consistently aggressive stance from the tax authorities on anything VDA-related, which is why many chartered accountants apply the conservative 30% treatment to INR-settled crypto futures trading regardless.
Why is the difference large?
Consider a trader who closes a financial year with ₹40,000 in gross profits and ₹15,000 in realized losses from crypto futures trading, having paid ₹6,000 in platform fees.
Under the VDA treatment, taxable income is ₹40,000. The ₹15,000 loss cannot be offset. The ₹6,000 in fees is not deductible. Tax at 30% plus 4% cess comes to ₹12,480 against the actual economic profit of ₹19,000.
Under business-income treatment, taxable income would be ₹19,000 after netting losses and deducting expenses, taxed at the trader’s slab rate.
That is the gap. And it compounds across every year a trader remains active.
What is not in dispute?
Several things are settled, and traders should treat them as fixed:
1% TDS applies under Section 194S, with thresholds of ₹50,000 per financial year for specified persons and ₹10,000 for others. TDS is not an additional tax; it is advance tax, credited against final liability and visible in Form 26AS and your AIS.
18% GST applies to exchange fees, levied on the fee itself rather than trade value or profit.
All VDA income must be reported in Schedule VDA of your ITR. ITR-2 covers occasional spot activity; ITR-3 is the safer form for anyone whose crypto futures trading is frequent.
Enforcement has tightened sharply. Exchange data sharing with the Income Tax Department is live, TDS entries appear automatically in AIS, and FIU-registered platforms report under PMLA obligations. Penalties for under-reporting run from 50% to 200% of tax owed, plus interest.
Where does the platform matter?
Ambiguity in the law makes documentation quality a practical concern rather than an administrative one. A trader arguing a business-income position needs contract notes, P&L statements, and settlement records that clearly evidence how each trade was margined and settled.
This is one reason INR-margined crypto futures trading has drawn interest from Indian traders.
Top crypto futures trading apps in India
| Platform | Starting Fees (Maker/Taker) | Max Leverage | INR Margined | Compliance |
| Suncrypto | 0.030% / 0.058% (down to 0.0075% at top tier) | Up to 100x | Yes (INR and USDT both) | FIU-complaint PMLA-complaint |
| Binance | 0.020% / 0.050% | High | No (USDT only) | FIU-complaint, limited INR rails |
| Zebpay | 0.06% – 0.15% /0.10% – 0.25% | Tiered | Partial | FIU-complaint PMLA-Complaint |
| Coinswitch Pro | Flat 0.02% / 0.05% | Up to 25x | Yes | FIU complaint |
| Bybit | 0.020% / 0.055% (+18% GST) | High | No | FIU-complaint (VDA-SP) |
The practical conclusion
Crypto futures trading in India operates under a tax framework that was not designed for it. Until the CBDT clarifies, traders face a choice between a conservative position that overtaxes and a defensible one that carries notice risk.
The sensible response is not to pick an answer from a blog. It is to trade on an FIU-registered platform that produces clean records, keep those records monthly rather than annually, and engage a qualified chartered accountant before the financial year closes when the position can still be planned rather than merely reported.
Is crypto futures trading income taxed at 30% in India?
Conservatively, yes under Section 115BBH, at 30% plus 4% cess. For INR-settled contracts, business-income treatment at slab rates is technically defensible but unconfirmed by the CBDT. Consult a qualified CA.
Does 1% TDS apply to crypto futures trading?
Under the VDA treatment, yes, on applicable transfers. Thresholds are ₹50,000 per financial year for specified persons and ₹10,000 for others. TDS is advance tax, not an extra levy, and is refundable if excess.
Can I set off crypto futures trading losses?
Under Section 115BBH, it is not against salary, not against other income, and under the prevailing reading, not even against other VDA gains. Losses also cannot be carried forward.
Are platform fees deductible?
Not under the VDA regime, where only the cost of acquisition is allowed. Under a business-income position they generally would be, which is a large part of why the classification matters.
Which ITR form should I use?
ITR-2 for occasional spot activity; ITR-3 if your crypto futures trading is frequent or you are adopting a business-income position. All VDA income goes in Schedule VDA.
Can the Income Tax Department see my futures trades?
Yes. Exchange data sharing is live, TDS appears in your AIS automatically, and FIU-registered exchanges report under PMLA.
Does SunCrypto handle TDS automatically?
SunCrypto deducts and remits 1% TDS where applicable on its USDT-to-INR conversion route and provides downloadable statements for filing.