Answer

1. F

   Facts

   DeFi income is received in the form of additional crypto tokens, not INR. How is it taxed?

2. P

   Provisions and law

   • IT Act, Sec 194 (old 115BBH) read with Sec 2(111) (old 2(47A)) VDA definition
3. A

   Analysis

   CBDT position (clarification 2023): Staking rewards, yield farming returns, and liquidity mining rewards are VDAs received as income. They are taxable at 30% on the fair market value (INR equivalent) on the date of receipt. This is income, not capital gains. Double taxation risk: You receive staking rewards (taxed at 30% on receipt). Later you sell the same tokens at a profit. The sale is also taxed at 30%. Your cost basis for the sale = the FMV on the date of receipt (which you already paid tax on). So you're taxed twice if the tokens go up after receipt. Record keeping: For every staking/yield reward received, note the date, amount, and INR price on that date. This is your cost basis for future sale computation.

4. C

   Conclusion

   Talk to a Savvy for the exact next step on your case.

General guidance from TaxSavvy’s library of money processes. Laws change; your Savvy confirms the answer on your exact case before anything is filed.