Crypto Taxation Made Simple for Seafarers! 🚀💰
- CA. Sachet Agarwal
- Apr 1
- 3 min read
Updated: Apr 5
🌍 1. India’s Stand on Cryptocurrency
The Indian Government has maintained a cautious approach towards cryptocurrencies. While crypto assets like Bitcoin and Ethereum are not recognized as legal tender, they have been officially categorized as Virtual Digital Assets (VDA) under the Finance Act, 2022.
For NRI Seafarers, this is significant. Even though you are earning outside India, if you are considered a Resident & Ordinary Resident (ROR) or if you invest/trade on Indian crypto exchanges, the Indian tax laws will apply to your crypto income. Therefore, understanding this tax regime is essential to stay compliant and avoid unnecessary penalties.
🪙 2. How Bitcoins & Cryptos are Acquired
Bitcoins and other cryptocurrencies can be acquired in various ways:
By mining them using computational power and resources 🌐⚙️
By purchasing them through registered crypto exchanges 💻📈
By receiving them as payment for goods or services
By exchanging one cryptocurrency for another
As an NRI Seafarer, you might invest or trade in cryptos during your off-ship period, or use your income to purchase digital assets. It's crucial to understand that how you acquire these cryptos will influence their classification and tax treatment in India.
🧾 3. Classification of Crypto Income for Seafarers
Income from cryptocurrencies is classified under different heads based on the nature and frequency of transactions:
If you are actively trading or doing it on a large scale, the income may be classified as Income from Business or Profession.
If you are holding cryptos for investment purposes and selling them occasionally, the income is treated as Capital Gains.
If you receive cryptos through mining, gifts, or as payment for services, it is taxable under Income from Other Sources.
🔔 Special Note for Seafarers:
The 30% crypto tax rate under the current crypto taxation in India will remain the same irrespective of the nature of income i.e., it does not matter if it is a Capital Gains income, Other Sources income or Business Income and is irrespective of the holding period.Even if you are an NRI, if you are trading on Indian exchanges, they are obligated to deduct TDS (Tax Deducted at Source) at 1% on every sale transaction above a threshold.
⚖️ 4. Taxability & Trading Rules in India
Under the Finance Act, 2022, the Indian Government introduced specific tax provisions for Virtual Digital Assets:
A flat tax rate of 30% on any profits made from the transfer of VDAs.
No deductions allowed other than the cost of acquisition. Expenses like transaction fees, internet costs, or other overheads cannot be deducted.
Losses from one VDA transaction cannot be set off against income from any other source.
A mandatory 1% TDS on every transfer of VDAs, deducted by Indian crypto exchanges.
The tax applies whether you are a resident or an NRI if the transaction is routed through India.
For NRI Seafarers: If you use an Indian crypto exchange while being outside India, TDS will still be deducted at source. Additionally, if you qualify as a tax resident of India based on your stay, global crypto income may become taxable.
💸 5. Direct & Indirect Tax Implications Explained
🔥 Direct Tax Implications:
✅ Profits from the sale of cryptos are taxed at a flat 30% rate.
✅ 1% TDS applies to every transfer of VDAs through Indian exchanges.
✅ Cryptos received as gifts are also taxable if the value exceeds ₹50,000.
✅ Mandatory disclosure of VDA holdings in your Indian Income Tax Return (ITR) under Schedule VDA.
🔥 Indirect Tax Implications:
✅ If cryptos are used in business or barter transactions, GST may apply.
✅ The supply of services/goods in exchange for cryptos is treated as a taxable supply under GST laws.
Seafarers' Key Alert: Even though you are earning outside India, if you remit your crypto profits or transact through Indian platforms, both direct and indirect tax provisions may apply.
📄 6. Key Takeaways & Recommendations
🔹 Cryptocurrencies are not banned in India, but they are not considered legal tender.
🔹 Tax provisions are stringent, with 30% tax on profits and mandatory TDS deductions.
🔹 Losses from cryptos cannot be adjusted against other incomes.
🔹 NRI Seafarers must disclose crypto income in ITR if liable to file tax in India.
🔹 Keep detailed records of all crypto transactions, including the acquisition cost, date, and platform used.
🔹 Stay updated with evolving crypto regulations and seek professional advice to avoid non-compliance.
File ITR for FY 2024-25 and ITR-U for previous financial years now with our team of expert Chartered Accountants (CA's) and Lawyers trusted by more than 1,000 Seafarers' of India.
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Great breakdown of how the Indian tax regime impacts crypto-savvy seafarers. For those navigating privacy in this space, tools like ZeusMix — a crypto mixer supporting various crypto coin types, including a litecoin mixer — can help manage digital assets more discreetly while staying informed and compliant.