How is crypto taxed in India?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-08-18 · ~8 min read

⚡ Quick answer

Profits from crypto and other Virtual Digital Assets (VDAs) are taxed at a flat 30% under Section 115BBH, plus surcharge and cess — regardless of your income slab. The only deduction allowed is the cost of acquisition (not even exchange fees). You cannot set off crypto losses against any other income, against gains on other coins, or carry them forward. On top of this, a 1% TDS under Section 194S is deducted on transfers above the threshold.

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India taxes crypto more strictly than almost any other asset. Whether you trade Bitcoin, hold Ethereum, earn from staking, or receive an NFT, the rules under Section 115BBH are flat, unforgiving and easy to get wrong. This guide breaks down exactly how crypto is taxed in India, with a worked example, the 1% TDS rule, how the 'no loss set-off' trap works, and how to report it correctly so you don't get an AIS mismatch notice.

1The flat 30% tax

Every gain from transferring a VDA — selling it for rupees, swapping one coin for another, or using it to buy something — is taxed at a flat 30% under Section 115BBH, plus surcharge and 4% cess. It doesn't matter if you're in the 5% slab or the 30% slab; crypto gains are always 30%.

The only thing you can subtract is the cost of acquisition (what you paid to buy it). You cannot deduct exchange fees, internet costs, or any other expense.

2The 'no loss set-off' trap

This is the rule that catches most people. A loss on one crypto cannot be used to reduce the gain on another crypto, cannot offset any other income (like salary or capital gains on shares), and cannot be carried forward to next year. Each gain is taxed on its own.

⚠️ ImportantSo if you make ₹1 lakh on Bitcoin and lose ₹1 lakh on another coin in the same year, you still pay 30% on the full ₹1 lakh Bitcoin gain — the loss is simply ignored for tax.

3A worked example

Suppose you bought Bitcoin for ₹1,00,000 and sold it for ₹1,50,000, and separately bought another coin for ₹50,000 and sold it for ₹20,000:

Bitcoin gain = ₹50,000 → taxed at 30% = ₹15,000 (plus cess)
Other coin loss = ₹30,000 → cannot be set off, simply ignored
Total tax = ₹15,000 + cess, even though your real net profit was only ₹20,000

💡 ExampleNotice how you pay tax on ₹50,000 of gain even though, across both coins, you only made ₹20,000. That's the harsh effect of the no-set-off rule — plan your sells with this in mind.

4The 1% TDS (Section 194S)

Separately from the 30% tax, a 1% TDS is deducted on the transfer of a VDA above ₹10,000 in a year (₹50,000 for specified persons like small individuals/HUFs). On Indian exchanges, the exchange deducts and deposits it; in peer-to-peer trades, the buyer must.

This TDS is not an extra tax — it's a prepaid credit. It shows up in your Form 26AS/AIS, and you adjust it against your final tax or claim a refund when you file your ITR.

5How to report crypto in your ITR

Crypto income goes in the dedicated 'Schedule VDA' of your income-tax return. Because exchanges report transactions and the 1% TDS appears in your AIS, the department can easily spot non-disclosure — leaving it out invites a mismatch notice.

✅ TipKeep a simple record of every buy and sell (date, coin, INR value, fees). Even though fees aren't deductible, you'll need accurate acquisition costs to compute each gain correctly.

6Airdrops, staking, mining and gifts

The flat 30% applies to gains on transfer. What people miss is that crypto can be taxed before any transfer happens.

An airdrop or a staking reward received without paying for it is taxed as income at its fair market value on the day you receive it, at your slab rate — not at 30%. When you later sell it, the 30% rule applies to the gain over that already-taxed value.

Crypto received as a gift is taxable in the recipient's hands where the value exceeds ₹50,000 in a year, subject to the usual exemptions for gifts from specified relatives and on occasions such as marriage.

⚠️ ImportantMining is treated similarly on receipt, and the cost of mining — hardware, electricity — is not deductible, because the section allows only the cost of acquisition against a transfer.

7What actually counts as a virtual digital asset

The definition in section 2(47A) is deliberately wide. It covers any information, code, number or token generated through cryptographic means, and it expressly includes non-fungible tokens.

That means the 30% regime is not limited to well-known coins. NFTs, most tokens and a great deal of what is loosely called 'web3' fall inside it. Indian currency and foreign currency are excluded, and the Central Government can notify specific exclusions.

8Foreign exchanges and the Schedule FA problem

Holding crypto on an exchange based outside India creates a disclosure obligation that is separate from the tax on gains. A resident and ordinarily resident taxpayer must report foreign assets in Schedule FA of the return.

This catches people out because the obligation exists whether or not you sold anything and whether or not you made a profit. The consequences of not disclosing are governed by the Black Money Act rather than the Income-tax Act, and they are severe relative to the sums usually involved.

✅ TipIf you have ever held a balance on an offshore exchange, raise it with a professional before filing rather than after a notice arrives.

9Losses, and why the ITR schedule is unforgiving

The 30% rate is only half the story. The harsher rule is that a loss on one virtual digital asset cannot be set off against a gain on another, and cannot be carried forward to any later year.

Sell one coin at a ₹2 lakh profit and another at a ₹2 lakh loss in the same year and you are taxed on ₹2 lakh, not on nil. This is unique to VDAs — no other asset class in the Act works this way.

Schedule VDA in the return reflects that design: it is reported transaction by transaction, with the date of acquisition, date of transfer and consideration for each. A net figure carried across from an exchange statement will not match what the schedule expects.

✅ TipDownload the full trade history from every exchange you used before you start the return. Reconstructing it later, after accounts have been closed or delisted, is the part that goes wrong.

Crypto tax in India at a glance
Item	Rule
Tax rate on gains	Flat 30% + surcharge + 4% cess (Section 115BBH)
Deductions allowed	Only cost of acquisition — no fees or other expenses
Loss set-off	Not allowed (against any income or other VDAs)
Carry forward losses	Not allowed
TDS	1% on transfers above ₹10,000 / ₹50,000 (Section 194S)
Where to report	Schedule VDA of the ITR

Key takeaways

Gains are taxed at a flat 30% plus cess, with no deduction except the cost of acquisition.
Losses cannot be set off against other VDA gains and cannot be carried forward.
Airdrops, staking rewards and mined coins are taxed on receipt at slab rates, not at 30%.
A 1% TDS under section 194S applies to transfers above the threshold.
Holdings on offshore exchanges must be disclosed in Schedule FA.

Frequently asked questions

Can I set off crypto losses against crypto gains?

No. Under Section 115BBH, a loss on one VDA cannot be set off against a gain on another VDA, nor against any other income, nor carried forward. Each gain is taxed at 30% on its own.

Do I pay tax if I only hold crypto and don't sell?

No — there's no tax on simply holding. Tax is triggered only when you transfer a VDA: selling for rupees, swapping for another coin, or spending it. Unrealised gains aren't taxed.

Is the 1% TDS an extra cost?

No — the 1% TDS under Section 194S is a prepaid credit. It appears in your Form 26AS/AIS and is adjusted against your final tax liability, or refunded, when you file your ITR.

How are crypto gifts, staking and airdrops taxed?

Receiving a VDA as a gift (above ₹50,000 from a non-relative) is taxable as income at your slab when received; staking rewards and airdrops are taxed as income at receipt, and then 30% applies on any further gain when you sell.

What exactly counts as a virtual digital asset?

Section 2(47A) defines it broadly: any information, code, number or token generated through cryptographic means, expressly including non-fungible tokens. Indian and foreign currency are excluded. In practice most coins, tokens and NFTs fall inside the 30% regime.

Do I have to disclose crypto held on a foreign exchange?

If you are resident and ordinarily resident, yes — foreign assets go in Schedule FA of the return, whether or not you sold anything or made a profit. Non-disclosure is dealt with under the Black Money Act, and the consequences are severe relative to the amounts usually involved.

Can I deduct the cost of mining equipment or electricity?

No. The section permits only the cost of acquisition against the transfer consideration. Infrastructure, electricity and trading expenses are not deductible, which is why the effective rate on mining is high.

Does the 30% rate apply if I trade crypto as a business?

The section applies to income from the transfer of a virtual digital asset regardless of how you characterise the activity, so the flat 30% and the bar on set-off apply to frequent traders too. Treating it as business income does not restore deductions for trading costs, and the position should be taken with a professional before filing.