This FAQ answers the most common questions about crypto tax in India for 2026. Whether you are a beginner or just curious, we explain the basics of how cryptocurrency is taxed, what forms to use, and how to stay compliant.

What is crypto tax in India?

In India, cryptocurrency is taxed at a flat rate of 30% on any income from transferring virtual digital assets (VDAs), plus applicable surcharge and 4% cess. This means that any profit you make from selling, swapping, or spending crypto is taxed at 30%, regardless of your income tax slab. There is no deduction allowed for expenses except the cost of acquisition. Additionally, a 1% TDS (Tax Deducted at Source) applies to the transfer of VDAs above a certain threshold. This tax regime was introduced in the Finance Act 2022 and remains in effect for the 2026 financial year.

  • 30% tax on gains
  • 1% TDS on transactions
  • No deductions for expenses (except cost of acquisition)

How are cryptocurrencies taxed in India?

Cryptocurrencies are taxed as 'Virtual Digital Assets' (VDAs) under the Income-tax Act, 1961. Any income from the transfer of a VDA is taxed at 30% plus cess and surcharge, and no expenses except the acquisition cost are allowed as deductions. Additionally, a 1% TDS is levied on the transfer of VDAs. Losses from crypto cannot be offset against other income. For the 2026 assessment year, these rules remain unchanged. If you receive crypto as payment for goods or services, the fair market value is taxable as business income or other income, and the same 30% tax applies on any subsequent gains.

When do I have to pay tax on crypto in India?

You have to pay tax on crypto in India when you 'transfer' a virtual digital asset, which includes selling, swapping, or using it to pay for something. The tax is applicable in the financial year in which the transfer occurs. For example, if you sell Bitcoin in March 2026, you must pay tax on the gains in that same financial year, and you will report it in your income tax return (ITR) filed in the following assessment year (AY 2026-27). TDS is also deducted at the time of the transaction if the buyer is in India. There is no tax on simply holding crypto; tax is triggered only on transfer.

How to calculate crypto tax in India?

To calculate crypto tax in India, you first determine your 'capital gains' by subtracting the cost of acquisition from the sale price of the crypto. Then, apply a flat 30% tax rate (plus surcharge and cess) on that gain. For example, if you bought 1 Bitcoin for ₹5,00,000 and sold it for ₹8,00,000, your gain is ₹3,00,000, and the tax would be 30% of that, which is ₹90,000, plus cess and surcharge. You cannot deduct any other expenses like transaction fees, internet charges, or hardware costs. Additionally, if you receive crypto as income, its fair market value is taxable as per your income slab, and any subsequent gains are taxed at 30%.

What is 1% TDS on crypto in India?

The 1% TDS (Tax Deducted at Source) on crypto in India is a tax collected on the transfer of virtual digital assets. It applies to every transfer of VDAs, and the buyer or the exchange deducts 1% of the transaction value and deposits it with the government. This TDS is not an additional tax but can be adjusted against your total tax liability. For example, if you sell crypto worth ₹1,00,000, the buyer deducts ₹1,000 as TDS, which you can claim as a credit when filing your ITR. The TDS is applicable from July 1, 2022, and continues in 2026. There are thresholds: TDS applies to transactions above ₹50,000 in a financial year for specified persons and ₹10,000 for others.

Can I offset crypto losses against profits in India?

No, you cannot offset crypto losses against any other income, including crypto gains. Under the Indian tax laws, losses from the transfer of virtual digital assets are not allowed to be set off against any income. This means if you make a profit on one crypto and a loss on another, you cannot net them; you pay 30% tax on the profit and cannot deduct the loss. This rule was introduced to prevent misuse and is strictly applied. For example, if you earn ₹2,00,000 from selling Bitcoin and lose ₹1,00,000 on Ethereum, you still pay 30% tax on the full ₹2,00,000 profit. It is crucial to keep separate records for each transaction.

What are the best ways to save tax on crypto in India?

There are very few legal ways to save tax on crypto in India because the 30% tax rate is flat and no deductions are allowed except for the cost of acquisition. However, you can consider these strategies: hold your crypto for the long term to defer taxes, but note that there is no long-term capital gains benefit; all gains are taxed at 30%. You can also use the TDS credit to reduce your overall tax liability. Another option is to donate crypto to charitable institutions registered under section 80G, but this is not widely recognized. Some experts suggest structuring your crypto activities as a business, which might allow deductions for business expenses, but this is aggressive and not recommended without professional advice. Always consult a tax advisor.

How to report crypto in income tax return (ITR) in India?

To report crypto in your income tax return (ITR) in India, you need to fill out Schedule VDA (Virtual Digital Assets) in the relevant ITR form. This schedule asks for details of all your virtual digital asset transactions, including the type of asset, quantity, sale price, cost of acquisition, and the resulting gains. You must file your return using ITR-2 (for individuals and HUFs not having business income) or ITR-3 (if you have business income). The due date is usually July 31 of the assessment year. Make sure to include all crypto transactions, even if you made a loss, as failure to report can lead to penalties. Also, report the TDS deducted on your crypto transactions in the appropriate schedule (e.g., Schedule TDS).

What are the penalties for not paying crypto tax in India?

If you do not pay or report your crypto tax in India, you may face penalties under the Income-tax Act. The penalties include interest on the unpaid tax, which is 1% per month on the outstanding amount, and a penalty of up to 200% of the tax due if the income is not disclosed. Additionally, if you fail to file your ITR, a late filing fee of up to ₹10,000 may apply. In serious cases of tax evasion, prosecution may be initiated, which can lead to imprisonment. The tax department has been increasing scrutiny on crypto transactions, and with the 1% TDS, they have visibility into your trades. It is always better to comply and file your taxes accurately.

Final Thoughts

In summary, crypto tax in India is straightforward but stringent: a flat 30% tax on gains, a 1% TDS on transactions, and no deductions for losses or expenses. As a beginner, it is essential to keep detailed records of all your crypto transactions, including dates, values, and costs, to calculate your tax accurately. While the tax rate may seem high, it is a clear framework that provides certainty.

For 2026, the rules remain the same, so you can plan your crypto activities accordingly. Remember to report your crypto holdings and transactions in your income tax return using the appropriate schedule. If you are unsure about any aspect, consult a tax professional who is familiar with crypto taxation in India.

Staying compliant not only avoids penalties but also contributes to the legitimacy of the crypto ecosystem in India. With the government's focus on tracking virtual digital assets, it is wise to be transparent with your tax obligations.