India's crypto tax regime has been in force since April 2022 and has been carried into the Income-tax Act, 2025 without change. It is short, and it is unforgiving. Most of the mistakes we see come not from ignorance of the 30% rate but from assuming that the ordinary rules — netting losses, deducting expenses, treating foreign platforms as out of scope — still apply. They do not. Here is the regime as it stands for FY 2026-27, with numbers.
What is a virtual digital asset
Any cryptocurrency, token or coin generated through cryptographic means, non-fungible tokens, and anything else the government notifies. The definition is deliberately wide; stablecoins, wrapped tokens, governance tokens and most NFTs are inside it. Indian rupee balances on an exchange are not.
The rate: 30%, on gain, with only cost deductible
Income from the transfer of a VDA is taxed at 30% plus surcharge and 4% cess, whatever your slab and however long you held the asset. The only deduction is the cost of acquisition. Exchange fees, gas fees, subscription costs, interest on borrowed funds, the cost of a hardware wallet — none of it is deductible. Nor are Chapter VI-A deductions (section 123 (80C of the 1961 Act), section 126 (80D of the 1961 Act)) available against VDA income, and the basic exemption limit does not shelter it: a student with no other income and ₹1 lakh of crypto gains pays ₹31,200.
The loss rule
A loss on a VDA cannot be set off against any income — including gains on a different VDA in the same year — and cannot be carried forward. This is the rule that changes the arithmetic entirely.
| Example | Ordinary capital gains rules | VDA rules |
|---|---|---|
| Gain of ₹3,00,000 on Bitcoin, loss of ₹2,00,000 on Ether in the same year | Net gain ₹1,00,000 | Taxable ₹3,00,000 at 30% = ₹93,600 including cess; the Ether loss is simply lost |
| Gain of ₹5,00,000 with ₹40,000 of exchange and gas fees | Fees deductible | Taxable ₹5,00,000 = ₹1,56,000; fees not deductible |
| Loss of ₹4,00,000 this year, gain of ₹4,00,000 next year | Loss carried forward, nothing taxable next year | Nothing this year; ₹1,24,800 next year |
The practical consequence is that the order and timing of disposals matter far more than they do for shares: realising a loss does nothing for you, and a gain is taxed in full whatever else happened in the portfolio.
TDS at 1% on every transfer
Section 393 (194S of the 1961 Act) requires the buyer — in practice, the exchange — to deduct 1% of the consideration on every transfer of a VDA, above ₹50,000 a year for an individual or HUF who has no business or professional income, or whose business turnover was up to ₹1 crore or professional receipts up to ₹50 lakh in the previous year (a 'specified person'), and above ₹10,000 for everyone else). It applies to sales for rupees and to crypto-to-crypto swaps, where the exchange either deducts in the asset received or requires the tax to be paid before the swap settles. The deduction appears in Form 26AS and AIS and is creditable against your final tax; a trader who turns over ₹1 crore across the year has ₹1 lakh of TDS to reconcile regardless of profit. On peer-to-peer and foreign platforms where no TDS is deducted, the liability to deduct technically falls on the buyer — and the absence of TDS is exactly the signal the department looks for.
Airdrops, staking, mining and tokens for work
Tokens received without paying for them — airdrops, staking rewards, mining, referral bonuses, tokens paid for development or content — are income when received, at their fair market value on that date, taxed as income from other sources or business income at slab rates. When later sold, the difference between the sale price and that value is a VDA gain at 30%. Keep a dated valuation for every receipt; without it the cost of acquisition on the later sale is treated as nil.
Gifts and transfers between wallets
A gift of crypto is taxable in the recipient's hands under section 92 (56(2)(x) of the 1961 Act) if the value exceeds ₹50,000 in a year, unless it comes from a relative. Moving coins between your own wallets or exchanges is not a transfer and is not taxed — but be able to prove that both wallets are yours.
What goes in the return
Every transfer during the year is reported in Schedule VDA of ITR-2 (or ITR-3 for those with business income) — date of acquisition, date of transfer, cost and consideration, line by line. Accounts on foreign exchanges and self-custodied wallets held at any time during the calendar year are reported by residents in Schedule FA, whether or not there was any income; omission attracts a penalty of ₹10 lakh per year under the Black Money Act. ITR-1 and ITR-4 cannot be used by anyone with VDA income.
Advance tax
Crypto gains are ordinary income for advance tax. If the tax liability for the year exceeds ₹10,000 after TDS, advance tax is payable in the June, September, December and March instalments; a large gain in April with no advance tax paid until the return attracts interest under sections 424 (234B of the 1961 Act) and 425 (234C of the 1961 Act) for the full period.
The data is now automatic
Indian exchanges already report to the department, and the AIS shows exchange-sourced entries against your PAN. From 1 April 2026 reporting entities must furnish statements of crypto-asset transactions to the department under the new reporting provision, and from 1 April 2027 India exchanges account information with other countries under the OECD's Crypto-Asset Reporting Framework — so foreign exchanges' records of Indian users flow to the Indian tax department automatically. A return that omits a Binance or Bybit account will be matched against that data. The 2025 amendments also brought undisclosed VDAs within the definition of undisclosed income in search cases, at the penal rate.
Send us the statements
We reconstruct trade histories across exchanges and wallets, compute gains per asset, reconcile TDS, and file Schedule VDA and Schedule FA correctly — or respond to the notice if one has already arrived. Our crypto and digital asset service or contact us.
Tax, GST and business setup advisors — Mumbai and Thane. Contact us to discuss your situation.
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