Crypto tax in India: how gains, losses and TDS work in 2026
India taxes crypto more harshly than almost any other asset. Gains are taxed at a flat 30 percent, losses are simply ignored, and 1 percent is withheld on most sales. None of that changed when the Income-tax Act, 2025 came in on 1 April 2026, though the section numbers did.
FilingBase editorial team · Facts checked against official sources on · Published
Quick answer
Gains on crypto and other virtual digital assets are taxed in India at a flat 30% plus cess, with only the purchase cost deductible. Losses cannot be set off or carried forward. Sellers suffer 1% TDS above ₹10,000 a year (₹50,000 for specified persons), and every trade goes in Schedule VDA.
- 30% flat, no expense deduction
- 1% TDS on transfers
- Report in ITR-2 or ITR-3, Schedule VDA
Official source: Income Tax Department: Taxation of virtual digital assets
The rules in one table
| Rule | What it means | Where it sits now |
|---|---|---|
| 30% flat tax | Gains from transferring any virtual digital asset (VDA) are taxed at 30% plus surcharge and 4% cess, whatever your slab | Formerly section 115BBH; carried into the 2025 Act |
| Only cost is deductible | No deduction for exchange fees, internet, hardware or any other expense; only the purchase cost | Same |
| Losses are wasted | A loss on one coin cannot be set off against a gain on another, against other income, or carried forward | Same |
| 1% TDS on sale | Withheld by the exchange or buyer when you sell | Formerly section 194S; now section 393(1), Table 8 |
| Report every trade | Each transfer goes line by line in Schedule VDA of the ITR | ITR-2 or ITR-3 |
A VDA includes cryptocurrency, stablecoins and NFTs (other than NFTs that only represent a real asset, like a property title). Gift cards and loyalty points are excluded.
A worked example
Priya bought 0.1 BTC for ₹5 lakh and some ETH for ₹2 lakh in FY 2026-27. She sold the BTC for ₹6.5 lakh and the ETH for ₹1.4 lakh.
| Asset | Sale price | Cost | Result |
|---|---|---|---|
| BTC | ₹6,50,000 | ₹5,00,000 | Gain ₹1,50,000 |
| ETH | ₹1,40,000 | ₹2,00,000 | Loss ₹60,000 (ignored) |
Her taxable VDA income is ₹1.5 lakh, not ₹90,000. Tax at 30% plus 4% cess is ₹46,800. The exchange withheld 1% of each sale: ₹6,500 on BTC and ₹1,400 on ETH, so ₹7,900 already sits in her Form 26AS and AIS as a credit. She pays the balance of ₹38,900 through advance tax or before filing.
Two points people miss. The loss on ETH cannot be used even though both are crypto. And the ₹7,900 of TDS on the loss-making sale is still refundable against her total tax, because TDS is a credit, not a separate tax.
The 1% TDS: who deducts it
- Indian exchanges deduct it on your sales and deposit it against your PAN. It shows in Form 26AS and the AIS.
- Peer-to-peer trades: the buyer is responsible for deducting 1% of the consideration. In practice P2P platforms structure this for you.
- Thresholds: no TDS where total payments to a seller in the year are below ₹50,000 for specified persons (individuals and HUFs without large business or professional receipts) or ₹10,000 for others.
- Foreign exchanges do not deduct Indian TDS. The tax is still due; you just pay all of it yourself.
Individuals deducting TDS on a P2P purchase do not need a TAN; they can deposit it using PAN. Businesses do need one; see our TAN registration guide.
Gifts, airdrops, mining and staking
| Situation | How it is taxed |
|---|---|
| Crypto received as a gift from a relative | Not taxed on receipt. The cost for the recipient is generally the donor’s cost. |
| Gift from a non-relative worth over ₹50,000 in the year | Taxed on receipt at slab rates as income from other sources; later sale taxed at 30% with that value as cost |
| Airdrops | Treated as income on receipt at fair value in most cases; later sale at 30% |
| Mining | Electricity, hardware and other mining costs cannot be deducted, so in practice the whole sale price is taxed at 30% |
| Staking and lending rewards | Income on receipt at slab rates; there is no specific rule yet, so keep records of value on the date received |
| Salary or freelance fees paid in crypto | Taxed as salary or business income at receipt value; the later sale is a separate VDA transfer |
Crypto-to-crypto swaps are transfers. Swapping USDT for BTC is a sale of USDT at the BTC’s value, so it can produce a taxable gain and attract TDS even though no rupees moved.
How to report crypto in your return
- Pick the right form. Crypto rules out ITR-1 and ITR-4. Use ITR-2 if the trades are investments, ITR-3 if you trade as a business. Our ITR form selector helps.
- Fill Schedule VDA with the date of acquisition, date of transfer, head of income, cost and sale value for every transfer. Exchanges provide a tax report you can export; match its totals to your AIS.
- Claim the TDS shown in Form 26AS. If it is missing, ask the exchange to correct its TDS return.
- Foreign exchanges and wallets: holdings on a foreign platform are generally treated as foreign assets, and the safer course for a resident is to disclose them in Schedule FA. Missing Schedule FA has its own penalty, separate from the tax.
- Pay advance tax in the quarter the gain arises. Interest for missed instalments runs from the due date; see our advance tax guide.
What the tax department sees
Indian exchanges file TDS returns, which put every sale against your PAN in the AIS. From 1 April 2026 the Act also requires prescribed reporting entities, including crypto service providers, to report crypto-asset transactions to the department, with daily penalties for not reporting. A mismatch between your AIS and your return is now one of the more common reasons for an income tax notice. If you have unreported crypto gains for earlier years, an updated return (ITR-U) is usually cheaper than waiting for the notice.
GST is a separate matter: exchanges charge 18% GST on their fees. Your gains are not subject to GST.
Frequently asked questions
What is the tax rate on crypto in India?
Gains from selling or swapping crypto are taxed at a flat 30% plus surcharge and 4% cess, whatever your income slab. Only the purchase cost can be deducted.
Can I set off crypto losses?
No. A loss on one crypto asset cannot be set off against a gain on another, against any other income, or carried forward to later years.
Is 1% TDS the final tax on crypto?
No. The 1% TDS is only a credit against your total tax. You still owe 30% on the gain and must file the trades in Schedule VDA.
Which ITR form do I use for crypto gains?
ITR-2 if you hold crypto as an investment, ITR-3 if you trade it as a business. ITR-1 and ITR-4 cannot be used.
Do I pay tax if I only hold crypto and never sell?
No tax arises just from holding. Tax arises on transfer, which includes selling for rupees, swapping for another coin, or spending crypto on goods or services.
Traded crypto this year?
A FilingBase CA reconciles your exchange reports with the AIS and files Schedule VDA correctly.
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Read guide→Official references
The statutory sources behind this page. We keep our guidance aligned to them — verify anything time-sensitive directly.
- Ministry of Corporate AffairsCompanies Act filings, forms and fee schedules
- Income Tax DepartmentReturns, forms, rates and e-filing utilities
- GST PortalRegistration, returns and rate notifications
Facts on this page are checked against these sources; the date of the last check is shown at the top of the page. It is general guidance, not advice on your specific facts. How we write and check our guides.