Crypto Futures Tax in India: Complete Guide for Traders

Cryptocurrency futures have become one of the most popular ways to participate in digital asset markets. By allowing traders to speculate on future prices without owning the underlying asset, futures offers both flexibility and leverage. However, when it comes to taxes, many traders are uncertain about how crypto futures trading is treated in India. Unlike spot trading in crypto, futures fall into a different category, and the rules around reporting and taxation can be confusing.

This article explains crypto futures in simple terms and dives into how profits, losses, and compliance requirements apply under Indian tax laws.

What is Crypto Futures Trading?

Crypto futures trading allows you to speculate on the price movement of a cryptocurrency at a future date. Instead of directly owning the coin, you agree to futures contracts in crypto that track the asset’s price.

There are two main types of futures contracts:

1. Standard futures: These have an expiry date. At settlement, the contract is closed at the agreed price.
2. Perpetual futures crypto: These contracts have no expiry date and remain open as long as you maintain margin requirements. They are the most popular instruments on any crypto futures exchange because of their flexibility.

For new investors, it is essential to understand perpetual vs futures crypto before placing trades. If you are wondering what perpetual futures in crypto are, think of them as contracts that mirror spot prices but without expiry, making them ideal for continuous speculation.

How are Profits from Crypto Futures Trading Taxed in India?

Profits from trading crypto perpetual futures are not treated in the same way as spot crypto trades. Under Indian income tax rules, these gains are generally classified as non-speculative business income.

This means:

1. Profits are added to your “Profits and Gains of Business or Profession” (PGBP) category under Section 28 of the Income Tax Act.
2. Tax is charged according to your applicable income tax slab rate (e.g., 5%–30% plus surcharge and 4% cess, depending on income level; up to 37% for high earners under the old tax regime).
3. Detailed records of every trade, including date, value, and contract details, should be maintained for accurate reporting.

Income Tax Return (ITR) Filing: Futures income must be reported using ITR-3 under the PGBP schedule. Report profits and losses in Schedule BP, and file by July 31 for non-audit cases or October 31 if an audit is required (e.g., turnover exceeds ₹1 crore).

So, if you trade crypto futures on a recognised platform, your earnings will be taxed like any other business income. For traders with high turnover, a tax audit under Section 44AB is mandatory if turnover exceeds ₹1 crore (or ₹10 crore with 95% digital transactions), calculated as the absolute sum of profits and losses from futures trading crypto.

Is the 30% Tax on Crypto Applicable to Futures Trading?

One of the most common questions from crypto futures trading for beginners is whether the 30% flat tax under Section 115BBH applies to futures. This 30% tax is specifically designed for the transfer of virtual digital assets (VDAs) such as Bitcoin, Ethereum, and other spot trades.

However, crypto perpetual futures explained under Indian law are treated differently because they are derivative contracts, not direct transfers of VDAs.

 Therefore:

1. Gains or losses from trading crypto futures are added to your business income.
2. They are taxed according to your individual tax slab, not the flat 30%.
3. A professional consultation is advisable if you are an active trader, as treatment can vary based on scale and frequency of trades.

This distinction is crucial for traders who want to calculate their crypto future prices after tax. Note that proposed SEBI regulations (as of December 2024) may classify some futures contracts in crypto as securities in the future, potentially altering tax treatment to capital gains for certain contracts.

Does the 1% TDS Apply to Crypto Futures Trades?

Another point of confusion relates to the 1% Tax Deducted at Source (TDS) under Section 194S. This rule applies to transfers of VDAs in spot markets, meaning every buy or sell transaction in cryptocurrencies is subject to TDS.

However, futures are derivatives and do not fall under the VDA category. That means:

1. No 1% TDS is deducted on perpetual futures in crypto.
2. Trading perpetual futures crypto on platforms like Giottus is not subject to this levy.

This makes futures attractive for frequent traders who want to avoid the constant drain of TDS on spot trades. However, traders using international platforms may face 20% Tax Collected at Source (TCS) under the Liberalised Remittance Scheme (LRS) if remittances for funding accounts exceed ₹7 lakh annually, as per RBI rules.

Can Losses from Crypto Futures Trading Be Set Off?

Just as profits are taxable, losses from futures trading crypto also need to be reported. In India, losses are classified differently depending on the type of business income:

1. Non-speculative business losses can be set off against most business income (except salary). These can also be carried forward for up to eight years, provided your return is filed on time.
2. Speculative business losses, however, can only be set off against speculative income and carried forward for four years.

The classification depends on how your trades are structured and reported. For instance:

1. If you use futures for hedging or crypto futures arbitrage strategies, they may be considered non-speculative.
2. On the other hand, frequent leveraged bets may fall under speculative trading.

Understanding this distinction is essential to manage your tax liability effectively and to use losses strategically. For example, a non-speculative loss from futures can offset profits from other business activities, reducing your overall tax burden.

Also read: Crypto Perpetual Futures Trading FAQs

Why Understanding Taxation is Essential for Traders

While it is exciting to learn what futures trading in crypto is, taxation is often overlooked by new traders. Taxes directly impact net profitability, and not knowing the rules can lead to unexpected liabilities.

Key takeaways:

• Crypto futures tax in India is not governed by the 30% VDA tax but by business income tax slabs.
• 1% TDS does not apply to perpetual future crypto contracts, unlike spot crypto.
• Losses can be strategically offset, but only within the correct classification rules.
• Compliance and documentation are non-negotiable.
• Turnover calculation (absolute profit/loss) determines audit requirements, and presumptive taxation may apply for small traders.

By knowing what crypto perpetual futures are and their tax treatment, you can approach trading crypto futures with more confidence. Using tools like a crypto futures calculator can also help estimate post-tax gains, ensuring you remain compliant while maximising profits.