How is crypto taxed in India?

By the India Law Simplified editorial team · Verified against the bare Acts & official portals · Updated 2026-07-28 · ~4 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.

Ask the free AI Tax agent →

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.

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

Crypto gains are taxed at a flat 30% (plus surcharge and cess) under Section 115BBH, whatever your slab.
Only the cost of acquisition is deductible — not exchange fees or any other expense.
Losses can't be set off against other income or other coins, and can't be carried forward.
A 1% TDS under Section 194S applies on transfers above the threshold — it's a credit, not an extra tax.
Report everything in Schedule VDA; the AIS makes non-disclosure easy for the department to catch.

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.