Crypto and VDA Taxation in India
India taxes cryptocurrency, NFTs and other virtual digital assets (VDAs) under a separate, strict set of rules that started in April 2022. Budget 2026 did not change the rules. Under the Income-tax Act, 2025, the provisions have been renumbered but work the same way.
The core rules
| Rule | What it means |
|---|---|
| Flat 30% tax on gains from transferring a VDA | Plus surcharge and 4% cess. Applies whatever your income level and regardless of how long you held it. There is no short-term/long-term split |
| Only cost of acquisition is deductible | No deduction for exchange fees (other than as part of cost), internet, hardware or other expenses |
| No set-off of losses | A loss on one coin cannot be set off against a gain on another coin, or against any other income |
| No carry-forward | VDA losses are lost permanently |
| 1% TDS on transfers | Deducted by the exchange or buyer above a threshold |
| No basic exemption benefit | The 30% applies even if your total income is below the exemption limit. The ₹12 lakh rebate does not cover it |
Example: you made a ₹1 lakh gain on Bitcoin and a ₹60,000 loss on Ethereum. Tax is due on the full ₹1 lakh: ₹31,200 including cess. The ₹60,000 loss is ignored.
1% TDS (old section 194S)
- Rate: 1% of the sale value. 20% if the seller has no PAN.
- Threshold: generally no TDS if the year’s total is ₹50,000 or less for “specified persons” (individuals and HUFs without business audit), and ₹10,000 for others.
- Indian exchanges deduct and deposit it. In peer-to-peer trades, the buyer must deduct.
- The TDS appears in your AIS / Form 168. Claim it in your ITR. It is not an extra tax.
Other crypto situations
| Situation | Tax treatment |
|---|---|
| Gift of crypto from a non-relative above ₹50,000 | Taxable for the person receiving it as income from other sources. Gifts from relatives are exempt |
| Airdrops | Generally taxable on receipt at fair value. Later sale at 30% |
| Staking or mining rewards | Taxable as income when received (at slab rate). Later sale at 30% |
| Crypto-to-crypto swaps | Each swap is a transfer, taxable at 30%, with 1% TDS |
| Trading crypto futures or derivatives on foreign platforms | Complex: may be business income. Get advice |
| Payment for goods or services in crypto | A transfer: taxable at 30% |
Reporting in your ITR
- Use ITR-2 (or ITR-3 if crypto is treated as business income). ITR-1 and ITR-4 cannot be used.
- Fill in Schedule VDA for every transfer: date of purchase, date of sale, cost, sale value. File it even if you made a loss.
- Report income from staking or mining under the right category (other sources or business).
- Download transaction statements from every exchange, including foreign ones.
Common mistakes
- Netting gains and losses across coins.
- Ignoring small TDS entries in the AIS. The tax department matches them with your ITR.
- Forgetting crypto-to-crypto trades or foreign exchange accounts.
- Not reporting because “I didn’t withdraw to my bank”. Tax applies on transfer, not withdrawal.
Frequently asked questions
Is crypto legal in India?
Holding and trading crypto is not banned, but it is heavily taxed and regulated for reporting. It is not legal tender.
Can I claim exchange fees as an expense?
Only as part of the cost of acquisition where they relate directly to buying. General expenses aren’t deductible.
I made an overall loss in crypto this year. Do I need to report it?
Yes. Report all transfers in Schedule VDA. Gains on individual transfers are still taxable even if you made an overall loss.
Did Budget 2026 reduce crypto tax?
No. The 30% tax and 1% TDS continue. Only the section numbers changed under the new Act.
Trading crypto? Garvita Jain & Co. reconciles exchange statements, prepares Schedule VDA, claims your TDS and files the right ITR. Contact us here, or at contact@garvitajainandco.com or +91 98678 16597.
This article is general information based on the law as of October 2026 and is not professional or investment advice.
Sources
Official
Professional / CA publications