Crypto glossary.
The terms you’ll meet in Indian crypto and tax, explained in a sentence or two.
- Airdrop
- Free tokens a project sends to wallets that meet certain conditions. Taxable in India. Read the guide →
- AIS (Annual Information Statement)
- Your yearly record, on the income tax portal, of income and transactions reported by banks, exchanges and others. Read the guide →
- Bridge
- A service that moves tokens from one blockchain to another. Bridges add their own risks. Read the guide →
- CARF
- The OECD’s Crypto-Asset Reporting Framework, under which countries share data on residents’ crypto accounts. Read the guide →
- Cost of acquisition
- What you paid for a coin, in rupees. The only deduction allowed against crypto gains in India. Read the guide →
- DeFi
- Decentralised finance: lending, trading and earning through smart contracts instead of companies.
- Depeg
- When a stablecoin or pegged token trades away from the value it’s meant to track. Read the guide →
- DEX
- A decentralised exchange, where you swap tokens directly from your wallet through a smart contract. Read the guide →
- FIFO
- “First in, first out”: treating the coins you bought first as the ones you sell first. Read the guide →
- FIU-IND
- India’s Financial Intelligence Unit. Crypto platforms serving Indians must register with it under anti-money-laundering law. Read the guide →
- Form 26AS
- Your tax credit statement on the e-filing portal, showing TDS deducted under your PAN. Read the guide →
- Gas fee
- The network fee paid to process a blockchain transaction. Not deductible for Indian crypto tax.
- Gas fee
- The fee paid to a blockchain to process a transaction, paid in its native token such as ETH or SOL. Read the guide →
- Halving
- The cut in new bitcoin paid to miners, roughly every four years. Read the guide →
- ITR-2
- The return for individuals without business income. Most salaried crypto investors file it. Read the guide →
- ITR-3
- The return for individuals with business or professional income, including crypto trading treated as a business. Read the guide →
- ITR-U (updated return)
- A return that lets you report missed income for earlier years, with additional tax. Read the guide →
- KYC
- “Know your customer”: identity checks, usually PAN and Aadhaar, required by registered exchanges.
- Layer 2
- A network such as Base or Arbitrum that processes transactions cheaply and settles them on Ethereum. Read the guide →
- Lien / debit freeze
- A block a bank puts on an account, often after a cyber-crime complaint linked to money you received. Read the guide →
- Liquid staking
- Staking through a protocol that gives you a tradable token, like stETH, in return for your staked coins. Read the guide →
- Liquidation
- When a leveraged position or loan is closed automatically because its collateral fell too far. Read the guide →
- LRS (Liberalised Remittance Scheme)
- RBI’s scheme that lets resident Indians send up to US$250,000 a year abroad, including for investments. Read the guide →
- Memecoin
- A token driven by jokes, culture and attention rather than a product. Most lose almost all their value. Read the guide →
- NFT
- A unique token recording ownership of a specific item, such as art, a game item or a ticket. Read the guide →
- P2P (peer-to-peer)
- Buying or selling crypto directly with another person, with rupees sent bank to bank. Risky in India because of account freezes. Read the guide →
- Passkey
- A phishing-resistant login tied to your device, replacing passwords and SMS codes. Read the guide →
- Points program
- A project’s system of rewarding activity with points that may later become an airdrop, with no guarantee. Read the guide →
- Proof of reserves
- Evidence that an exchange holds enough assets to cover customer balances. Read the guide →
- Recovery (seed) phrase
- The 12 or 24 words that control a wallet. Anyone who has them can take your funds. Never share them. Read the guide →
- Rug pull
- When a token’s creators sell out or remove liquidity, leaving buyers unable to sell. Read the guide →
- Schedule FA
- The ITR section for disclosing foreign assets. Holdings on foreign exchanges may need to go here. Read the guide →
- Schedule VDA
- The section of ITR-2 and ITR-3 where every crypto transfer is reported. Read the guide →
- Self-custody wallet
- A wallet where you, not an exchange, hold the keys to your crypto. Read the guide →
- Slippage
- How much worse a price you accept on a swap if the market moves before it completes. Read the guide →
- Specified person
- For crypto TDS: an individual or HUF without business income, or under turnover limits. Their TDS threshold is ₹50,000 a year. Read the guide →
- Spot Bitcoin ETF
- A US-listed fund that holds real bitcoin, traded like a share. Read the guide →
- Stablecoin
- A token designed to hold a steady value, usually $1, such as USDT or USDC. Read the guide →
- Staking
- Locking up coins to help run a blockchain, in return for rewards. Rewards are commonly taxed as income. Read the guide →
- Tax year
- Under the Income-tax Act, 2025, the single term replacing “previous year” and “assessment year”. Read the guide →
- TDS (tax deducted at source)
- 1% of the sale value held back when you sell crypto. It’s an advance tax payment you claim in your ITR. Read the guide →
- Token approval
- Permission you give a smart contract to move a token from your wallet. Revoke ones you no longer need. Read the guide →
- USDT (Tether)
- The most traded stablecoin, designed to be worth $1. In India it often trades at a premium to the dollar rate. Read the guide →
- VDA (virtual digital asset)
- India’s legal term for crypto, stablecoins and most NFTs. Gains from transferring them are taxed at 30%. Read the guide →