How crypto is taxed in India
The 30% rule, the 1% TDS, why losses don't help you, and a worked example you can check with a calculator.
By India taxes crypto differently from shares, mutual funds or gold. The rules are strict, they apply from your very first trade, and most of the mistakes people make come from assuming crypto works like equity. This guide covers the position for the 2026–27 financial year.
The short version
- Profit from selling, swapping or spending crypto is taxed at a flat 30%, plus 4% cess (and surcharge if your income is high enough). Your income slab doesn’t matter. Neither does how long you held it.
- The only deduction allowed is what you paid for the asset. No deduction for other expenses.
- Losses can’t be set off. A loss on one coin does not reduce tax on a profit from another, or on your salary. It can’t be carried forward either.
- 1% TDS is deducted when you sell above a yearly threshold. It’s an advance payment of your tax, not an extra tax.
- You report everything in Schedule VDA of your income tax return.
What counts as a taxable event
The law calls crypto, NFTs and similar tokens virtual digital assets (VDAs). Tax applies when you transfer one, which covers more than a sale for rupees:
- Selling crypto for INR on an exchange
- Swapping one coin for another, say BTC for ETH. The swap is treated as selling BTC at its market value.
- Paying for goods or services in crypto
- Converting crypto to a stablecoin like USDT
Simply buying crypto and holding it is not taxed. Moving coins between your own wallets is not a transfer to someone else and is generally not taxed.
Why losses hurt more than you think
With shares, a loss on one stock can reduce the tax on a gain from another. Crypto doesn’t work that way. Each profitable transfer is taxed on its own, and losses are simply ignored. If you made ₹50,000 on one coin and lost ₹50,000 on another, your net gain is zero but you still owe tax on ₹50,000.
The 1% TDS
When you sell crypto, 1% of the sale value is deducted as tax at source. On Indian exchanges, the exchange does this automatically. For most salaried individuals, TDS starts once your crypto sales in a financial year cross ₹50,000. For some other taxpayers the threshold is ₹10,000.
The TDS appears in your Form 26AS and annual information statement, and you claim it against your final tax when you file. On peer-to-peer trades or foreign platforms, nobody may deduct it for you, but the tax on your gain is still owed.
A worked example
You buy Bitcoin for ₹1,00,000 and later sell it for ₹1,50,000. In the same year, you sell another coin at a ₹20,000 loss.
| Item | Amount |
|---|---|
| Gain on Bitcoin (₹1,50,000 − ₹1,00,000) | ₹50,000 |
| Tax at 30% | ₹15,000 |
| Health and education cess at 4% | ₹600 |
| Total tax on the gain | ₹15,600 |
| Less: TDS deducted on the ₹1,50,000 sale (1%) | ₹1,500 |
| Balance to pay when filing | ₹14,100 |
The ₹20,000 loss on the other coin changes nothing in this table. That’s the rule most people don’t expect.
Gifts, airdrops and staking rewards
Gifts: crypto you receive as a gift is taxable in your hands if the total value of gifts in a year crosses ₹50,000, unless it comes from a relative or on an occasion like your wedding.
Airdrops, staking and mining rewards: these can be taxed as income when you receive them and again when you later sell them. How exactly to value them is less settled than the rest of the rules, so keep records of the value on the day you received them and ask a CA before filing.
The new Income-tax Act
From 1 April 2026, the Income-tax Act, 2025 replaced the 1961 Act. For crypto, the substance didn’t change: the 30% rate, the cost-only deduction, the loss restrictions and the 1% TDS all carry over. The section numbers did change, so older articles that cite section 115BBH or 194S are describing the same rules under their old numbers. Platforms also face stricter reporting duties, which means the tax department sees more of your activity than before.
What to do now
- Download a full transaction statement from every exchange you use, every year.
- Keep a simple sheet: date, coin, quantity, buy price, sell price.
- Check your Form 26AS and annual information statement for TDS before you file.
- Fill Schedule VDA line by line. Don’t net your gains and losses together.
This guide explains the rules as they stood in October 2026. It is general information, not tax advice for your situation. Tax law changes with each Budget, so confirm the current position with a CA before you file.
Encume publishes educational material only. This is not investment, tax or legal advice. Crypto assets are not regulated as investments in India and can lose all their value.