Cryptocurrency has become an increasingly popular investment option in India, but understanding crypto taxes in India is equally important. Whether you trade Bitcoin, Ethereum, stablecoins, or other virtual digital assets, your transactions may carry tax implications.
The Indian government introduced a specific taxation framework for Virtual Digital Assets (VDAs) in 2022. Under the current rules, income from the transfer of VDAs is taxed at a flat 30%, along with applicable surcharge and cess. A 1% Tax Deducted at Source (TDS) may also apply to eligible crypto transfers.
This guide covers crypto taxes in India in detail, including the applicable tax rate, TDS rules, taxable transactions, treatment of losses, and how to report crypto income in your Income Tax Return (ITR).
What are crypto taxes in India?
In India, cryptocurrencies fall under the broader category of Virtual Digital Assets (VDAs) for income-tax purposes. This framework covers crypto assets and NFTs, among other qualifying digital assets. Crypto-asset was explicitly added to the VDA definition from April 1, 2026, and exchanges must now file transaction reports under the new reporting regime with penalties for failures, so the department can cross-check declarations.
Under Section 115BBH of the Income-tax Act, income from the transfer of a VDA is taxed at a flat 30%, regardless of your income-tax slab or how long the asset was held. An applicable surcharge and a 4% health and education cess may also apply, bringing the effective rate to roughly 31.2% for most taxpayers. From April 1, 2026, the same provisions continue under renumbered sections of the Income Tax Act, 2025.
This is what makes crypto taxes in India stand apart from many traditional investments, where rates often vary with the holding period.
For example, if you buy crypto for ₹100,000 and sell it for ₹150,000, your taxable gain is ₹50,000. At 30%, the basic tax on that gain is ₹15,000, before cess and surcharge.
What is the crypto tax rate in India?
The tax rate on VDA income is a flat 30% under Section 115BBH. Key points to remember:
- A flat 30% tax applies to income from the transfer of VDAs.
- The rate doesn’t depend on your income-tax slab or holding period.
- Only the cost of acquisition can generally be deducted, no other expenses.
- A 4% health and education cess always applies on top of the tax; a surcharge is added only if your total income exceeds ₹50 lakh.
Because rates don’t flex with circumstances, accurate records of purchase price and sale value are essential for anyone calculating what they owe.
Which crypto transactions are taxable?
Understanding what counts as a taxable transfer is central to crypto taxes in India. Common taxable events include:
Selling crypto for INR: If you buy Bitcoin for ₹2 lakh and sell it for ₹2.5 lakh, the ₹50,000 gain is taxable.
Swapping one crypto for another, a crypto-to-crypto swap, such as exchanging Ethereum for Bitcoin, can also trigger tax. You don’t need to convert to rupees for a transfer to count.
Using crypto to pay for goods or services, spending crypto is treated as a transfer, so records should be kept even when you aren’t selling for cash.
Receiving crypto as income (mining, staking, airdrops): This is typically taxed in two stages. At receipt, the fair market value (FMV) of the crypto is taxed as income at your slab rate. Later, if you sell, swap, or spend that same crypto, the gain over the FMV already taxed is taxed again at the flat 30% rate under Section 115BBH. Because the same asset can effectively be taxed twice, track the FMV at receipt carefully; it becomes your cost of acquisition for the later sale.
Is buying and holding crypto taxable?
Simply buying and holding crypto does not create a taxable transfer. If you buy Bitcoin for ₹1 lakh and its value rises to ₹1.5 lakh while you hold it, that increase alone doesn’t trigger the 30% tax. Tax becomes relevant only when you transfer the asset by selling, swapping, or spending it. This is a key nuance that many new investors miss.
What is 1% TDS on crypto?
Beyond the 30% tax, crypto taxes in India also include a 1% TDS requirement under Section 194S. This TDS is deducted from the consideration paid for transferring a VDA to a resident, subject to threshold and conditions, and it isn’t an extra tax on top of the 30%, but an amount credited against your final liability.
The threshold depends on the payer:
- For a specified person, an individual or HUF with no business income, or with business turnover up to ₹1 crore or professional receipts up to ₹50 lakh, TDS isn’t required if aggregate consideration stays under ₹50,000 in the financial year.
- For other persons, the threshold is ₹10,000.
For exchange-based transactions, who deducts the TDS can depend on how the transaction and payment are structured.
Can crypto losses be set off against profits?
This is one of the strictest parts of crypto taxes in India. Under Section 115BBH, the department’s view is per-transaction; losses from one VDA cannot be set off against gains from another VDA or against any other income, and they cannot be carried forward to future years.
For example, if you made an ₹80,000 profit on Bitcoin and a ₹30,000 loss on Ethereum, you can’t net these to a ₹50,000 taxable gain. Tax is payable on the full ₹80,000 Bitcoin profit; the Ethereum loss is effectively forfeited.
How to report crypto income in your ITR
Reporting correctly is a core part of staying compliant with crypto taxes in India. The Income Tax Department provides a dedicated Schedule VDA for reporting VDA income, requiring transaction-wise details such as
- Date of acquisition and date of transfer
- Head under which the income is taxed
- Cost of acquisition and consideration received
- Income from the transfer
Schedule VDA is available in ITR-2 and ITR-3. Before filing, reconcile your transaction history with exchange and wallet records so your purchase price, sale price, and dates line up accurately. The filing deadline for FY 2025–26 was July 31, 2026 (non-audit), and October 31 for audit cases.
Crypto held on foreign exchanges
Holding crypto through overseas platforms doesn’t remove your obligations under crypto taxes in India. Depending on your residential and tax status, foreign holdings may need to be disclosed in the relevant section of your ITR. Investors using international platforms should review disclosure requirements carefully and maintain proper transaction records.
Foreign holdings go in Schedule FA with no minimum value; the draft is vague here.
Common mistakes to avoid
- Ignoring crypto-to-crypto swaps: tax isn’t limited to INR conversions.
- Assuming losses cancel profits: they generally can’t offset other VDA or non-VDA income.
- Forgetting TDS credits: Make sure deducted TDS is reflected correctly in your records.
- Poor record-keeping: trading across multiple exchanges and wallets makes reconstruction difficult later.
- Treating crypto like traditional investments: equity or mutual fund tax rules don’t apply here.
- Crypto counts as “undisclosed income” in search cases since February 2025, taxed at 60% plus penalty.
Staying compliant
Good compliance with crypto taxes in India comes down to consistent record-keeping. Track the acquisition date and cost of every asset, the date and value of each transfer, crypto-to-crypto swaps, crypto received as income, and any TDS deducted. Reconcile this with your exchange statements before filing, and report everything through Schedule VDA.
Given how complex and strict these rules can be, investors with significant or complicated activity should consult a qualified tax professional.
Final thoughts
The current framework for crypto taxes in India imposes a flat 30% tax on VDA transfers, plus applicable surcharge and cess, with eligible transactions also attracting 1% TDS under Section 194S. Simply holding crypto isn’t taxable, but selling, swapping or spending it can be. Losses receive restricted treatment and can’t offset other gains or be carried forward.
Staying on top of crypto taxes in India, through accurate records and correct reporting via Schedule VDA, helps investors remain compliant and avoid unnecessary complications.
Disclaimer: This article is for informational and educational purposes only and should not be considered tax, legal, or financial advice. Tax rules may change, and individual liability can vary. Consult a qualified tax professional for advice based on your specific circumstances.
What is the crypto taxes in India?
o taxes refer to the taxation framework applied to profits from Virtual Digital Assets (VDAs) — including cryptocurrencies like Bitcoin and Ethereum, as well as NFTs. Under Section 115BBH of the Income-tax Act, any income from transferring a VDA is taxed at a flat 30%, regardless of your income slab or how long you held the asset. A 4% health and education cess always applies on top of that tax, and a surcharge is added only if your total income exceeds ₹50 lakh — bringing the effective rate to roughly 31.2% for most taxpayers. In addition, a 1% TDS under Section 194S applies to eligible transfers. Only the cost of acquisition can be deducted, no other expenses are allowed, and losses from VDAs cannot be set off against other income or carried forward.
Is crypto taxed if I only hold it?
Generally, no. Simply buying and holding crypto without transferring it does not itself trigger the 30% VDA tax.
Is there a 1% TDS on crypto in India?
Yes. Section 194S provides for 1% TDS on eligible payments for the transfer of VDAs, subject to applicable thresholds (₹50,000 for specified persons, ₹10,000 for others).