DeFi income: staking rewards, yield farming, liquidity mining

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

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.