Crypto Tax in India — Section 115BBH, TDS, and Filing Requirements for FY 2025-26
Cryptocurrency taxation in India was formalised by the Finance Act 2022, which introduced Section 115BBH and Section 194S. India's crypto tax regime is among the strictest globally — a flat 30% tax rate with no deductions, no set-off of losses, and 1% TDS on every transaction above threshold. Understanding these rules is essential to avoid penalties.
Section 115BBH — Flat 30% Tax Rate: Any income from transfer of Virtual Digital Assets (VDA) — including cryptocurrencies like Bitcoin, Ethereum, and even NFTs — is taxed at a flat 30% rate plus 4% health and education cess = effective rate of 31.2%. This applies regardless of your total income, holding period, or whether you are an individual, HUF, or company. No basic exemption limit applies; even ₹1 profit is taxable at 30%.
No Loss Set-Off — The Harsh Reality: Losses from sale of one cryptocurrency cannot be set off against gains from another cryptocurrency, or against any other income. If you made ₹50,000 profit on Bitcoin and ₹40,000 loss on Solana, you pay 30% tax on ₹50,000 profit (₹15,600) and cannot use the ₹40,000 loss to reduce this. Losses cannot be carried forward to future years either. This makes active crypto trading particularly tax-inefficient in India.
Section 194S — 1% TDS on Crypto Transactions: If you sell crypto on Indian exchanges (WazirX, CoinDCX, Zebpay), the exchange deducts 1% TDS on the transaction value above ₹10,000 per year (₹50,000 for specified persons). This TDS can be claimed as credit in your ITR but creates immediate cash flow impact — you receive only 99% of sale proceeds immediately. For P2P transactions between individuals, the buyer is responsible for deducting and depositing TDS.
ITR Filing for Crypto: Report crypto income in Schedule VDA of your ITR. The income is added to your total income but taxed separately at 30%. Maintain detailed records: purchase date, cost, sale date, sale price, exchange name, and transaction ID for every transaction. Exchanges provide annual transaction statements. In case of international exchanges or P2P transactions, you must maintain your own records. Non-disclosure of crypto income can attract penalties and prosecution under the Income Tax Act.
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Cryptocurrency & VDA Tax in India — Complete Guide (FY 2025-26)
Income from Virtual Digital Assets (VDA) — cryptocurrencies, NFTs, and other digital tokens — is taxed under a special regime introduced via Section 115BBH of the Income Tax Act. Unlike equity or mutual funds, crypto gains don't benefit from long-term capital gains concessions, indexation, or loss set-off.
The Flat 30% Rule
Any gain from transferring a VDA is taxed at a flat 30% rate, plus applicable cess — regardless of your income slab and regardless of how long you held the asset. This applies whether you're a salaried employee in the lowest tax bracket or a high earner in the 30% slab.
1% TDS Under Section 194S
Every crypto exchange in India deducts 1% TDS on the transaction value (not just the profit) when you sell. This TDS is adjustable against your final tax liability — if your actual tax due is lower than the TDS deducted, you can claim a refund when filing your ITR.
No Loss Set-Off, No Carry Forward
This is the harshest part of crypto taxation in India: if you lose money on one crypto transaction, you cannot offset that loss against gains from another crypto asset, against gains from stocks or mutual funds, or against any other income. Losses also cannot be carried forward to future years.
Gifting and Mining
Crypto received as a gift is taxable in the recipient's hands as "Income from Other Sources" if the value exceeds ₹50,000. Crypto received from mining is valued at fair market value on the date of receipt and taxed accordingly, with the cost of acquisition treated as zero for subsequent sales.
Frequently Asked Questions
Is crypto legal in India? +
Cryptocurrency is not banned in India, but it's also not recognized as legal tender. The government taxes crypto gains under Section 115BBH, which implicitly acknowledges its existence as an asset class without granting it legal currency status.
Can I offset crypto losses against my salary income? +
No. Crypto losses cannot be set off against any other type of income, including salary, business income, or capital gains from other assets. This is unique to VDA taxation in India.
Do I need to pay tax if I just hold crypto without selling? +
No tax is due on unrealized gains. Tax is only triggered when you sell, swap, or spend the cryptocurrency — at which point the 30% flat tax applies on the profit made.
What if I trade crypto-to-crypto, not crypto-to-INR? +
Crypto-to-crypto trades are also taxable events in India. Each swap is treated as a sale of one asset and a purchase of another, triggering capital gains tax on any profit made in INR terms.
🔄 Last Updated: July 2026 · FY 2025-26 rates applied