Crypto Tax in India
Tax authority: Income Tax Department · Last updated: 2026
India introduced comprehensive crypto tax rules in the 2022 Union Budget, establishing one of the strictest regimes in the world. Virtual Digital Assets (VDAs) are taxed at a flat 30% on all gains with no slab benefit, no distinction between short-term and long-term, and no ability to offset losses against other income. A 1% TDS on crypto transactions adds additional compliance requirements. Despite the harsh rates, the rules provide clarity — and proper reporting is essential as the Income Tax Department actively monitors transactions.
Overview
| Classification | Virtual Digital Asset (VDA) |
| Capital Gains Tax | Flat 30% on all gains (no distinction between short/long-term) |
| Holding Period | No reduced rate for any holding period |
| Cost Basis Method | Purchase price only (no other deductions allowed except cost of acquisition) |
| Reporting Forms | ITR-2 or ITR-3, Schedule VDA |
Key Rules
- •Flat 30% tax on all crypto gains — no slab benefit, no distinction by holding period
- •1% TDS on transactions above ₹10,000/year (₹50,000 for specified persons)
- •Cannot offset crypto losses against any other income
- •Cannot carry forward crypto losses
- •Only cost of acquisition is deductible — no other expenses
Taxable Events
- !Selling crypto for INR or any fiat currency
- !Trading one crypto for another (e.g., BTC to ETH)
- !Using crypto to pay for goods or services
- !Receiving crypto as a gift (above ₹50,000 in value)
- !Mining and staking rewards (income at fair market value on receipt)
- !Airdrops (taxed as income at receipt)
Not Taxable
- ✓Buying crypto with INR and holding it
- ✓Transferring crypto between your own wallets
- ✓Receiving crypto as a gift from specified relatives
Tax Rates
| Income Bracket | Rate | Note |
|---|---|---|
| All VDA gains | 30% | Flat rate — no slab benefit, no holding period distinction |
| Surcharge: ₹50L – ₹1Cr | +10% | On the 30% tax |
| Surcharge: ₹1Cr – ₹2Cr | +15% | On the 30% tax |
| Health & education cess | +4% | On total tax + surcharge |
| TDS on transactions | 1% | Deducted at source above ₹10,000/year (₹50,000 for specified persons) |
Common Scenarios
The flat 30% rate
Unlike most of India's income tax structure, crypto gains are taxed at a flat 30% regardless of your income slab or holding period. A student earning ₹3 lakh and a professional earning ₹50 lakh both pay 30% on crypto gains. There is no benefit to holding long-term, and the rate is among the highest in the world.
No loss offsetting
Crypto losses cannot be offset against any other income — including gains from other crypto assets. If you gain ₹1 lakh on Bitcoin and lose ₹1 lakh on Ethereum, you pay 30% tax on the Bitcoin gain (₹30,000) and get no benefit from the Ethereum loss. You also cannot carry forward crypto losses to future years.
1% TDS compliance
A 1% TDS (Tax Deducted at Source) applies to crypto transactions above ₹10,000/year (₹50,000 for specified persons like individuals/HUFs with professional income). Indian exchanges deduct TDS automatically. For P2P and international exchange transactions, the buyer is responsible for deducting and remitting TDS. The TDS is adjustable against your final tax liability.
Gifts and airdrops
Crypto received as a gift is taxable as income if the value exceeds ₹50,000 in a financial year — unless received from a specified relative (parent, spouse, sibling, etc.). Airdrops are taxed as income at fair market value on receipt. When you later sell gifted or airdropped crypto, the 30% flat tax applies to the gain.
Best Crypto Tax Software for India
Frequently Asked Questions
- Can I offset crypto losses against other income?
- No. Under Section 115BBH, losses from Virtual Digital Assets cannot be set off against any other income, including income from other VDAs. For example, if you have a profit on Bitcoin and a loss on Dogecoin, you cannot net them — you pay 30% on the Bitcoin profit and get nothing for the Dogecoin loss. Losses also cannot be carried forward.
- What is the 1% TDS on crypto?
- Under Section 194S, a 1% TDS is deducted on the sale of Virtual Digital Assets. Indian exchanges handle this automatically. For P2P trades, the buyer must deduct 1% and deposit it with the government using Form 26QE. The TDS threshold is ₹10,000/year (₹50,000 for specified persons). The TDS amount is credited to your tax account and reduces your final tax liability.
- How do I report crypto on my ITR?
- Report crypto income on Schedule VDA in your Income Tax Return. Use ITR-2 (if you have capital gains/crypto income) or ITR-3 (if you have business income as well). List each VDA transaction with date of acquisition, date of transfer, cost of acquisition, and sale consideration. The 30% tax is calculated automatically.
- Are crypto gifts from relatives taxable?
- No, crypto gifts from 'specified relatives' (spouse, siblings, parents, grandparents, and their spouses) are exempt regardless of value. Gifts from anyone else exceeding ₹50,000 aggregate value in a financial year are taxable as 'Income from Other Sources' at your slab rate. The recipient's cost basis is the fair market value at the time of the gift.
- Does the Income Tax Department track crypto?
- Yes. Indian exchanges are required to report transaction data. The government has also been working on international information-sharing frameworks. The 1% TDS mechanism creates a paper trail for every transaction. The Income Tax Department has previously sent notices to crypto traders identified through exchange data and banking records.
Disclaimer: This guide is for informational purposes only and does not constitute tax advice. Crypto tax rules change frequently. Consult a qualified tax professional in India for advice specific to your situation.