Crypto mining in India is legal, taxed in two layers, and operationally constrained mainly by electricity costs. With cheap power (Himachal hydro, some industrial subsidised regions), small-scale mining can clear margins.
Legal status
There is no Indian law banning mining. RBI has not restricted it. PMLA registration applies if you operate as a service provider; for personal mining, no specific registration.
Tax layer 1 — receipt
Mining rewards are 'business income' (or 'income from other sources' depending on scale and intent). Taxed at slab rate on the rupee-equivalent at receipt.
This is the leg where electricity, hardware depreciation, internet, rent are deductible business expenses (under Sections 30-37 if business income).
Tax layer 2 — sale
Subsequent sale of mined coins: VDA transfer under 115BBH. 30% on gain (sale price minus rupee-value at mining receipt).
Mining-side expenses are NOT deductible against this 30% — only against the layer-1 business income.
Practical considerations
GPU mining is mostly unprofitable in India by 2026 — power costs ₹5-10/kWh in most states make ETH-classic, RVN, etc. uneconomical.
ASIC mining for BTC requires power below ~₹3/kWh to break even. Some industrial regions in Telangana, Maharashtra qualify.
Small-scale residential mining is largely a hobby; meaningful returns require commercial-scale setups.
Key takeaways
- Mining is legal in India.
- Two-layer tax: business income at receipt + 30% at sale.
- Power, hardware, internet deductible at layer 1 only.
- Profitability requires <₹3/kWh power for BTC; mostly commercial-scale.
