Crypto Tax in India —
Flat 30%, 1% TDS, No Set-off
How cryptocurrency and other Virtual Digital Assets are taxed at a flat 30% under Section 115BBH, the 1% TDS under Section 194S, why losses cannot be set off, and how to report crypto in Schedule VDA of your ITR.
Gains on cryptocurrency and every Virtual Digital Asset (VDA) are taxed at a flat 30% under Section 115BBH, regardless of holding period and regardless of which tax regime you choose. With 4% cess the effective rate is 31.2%. Only the cost of acquisition is deductible — no brokerage, gas fees or other expenses. VDA losses cannot be set off against any income (not even against other crypto gains) and cannot be carried forward. A 1% TDS under Section 194S applies on transfers above the threshold, and income is reported in Schedule VDA of ITR-2 or ITR-3.
The flat 30% VDA rate is not a slab rate — the basic exemption limit and the Section 87A rebate do not shield crypto gains. It applies identically in the old and the new regime. Even if your total income is below the taxable threshold, tax at 30% is still due on the VDA gain.
Crypto Scenarios & Their Tax Treatment
How each common transaction is taxed, the applicable rate and whether 1% TDS under Section 194S is deducted.
| Transaction | Tax treatment | Rate | TDS |
|---|---|---|---|
| Buy & sell crypto at a profit | VDA gain u/s 115BBH | 30% + cess | 1% · exchange |
| Buy & sell crypto at a loss | VDA loss — no set-off, no carry-forward | — | 1% on proceeds |
| Crypto-to-crypto swap (BTC → ETH) | Transfer of VDA — taxed at FMV on swap date | 30% + cess | 1% |
| P2P sale | VDA transfer — buyer deducts TDS | 30% + cess | 1% · buyer |
| Crypto mining reward | Business income / other sources; cost of acquisition = Nil | Slab rate | No TDS |
| Staking / airdrop received | Income from other sources at FMV on receipt | Slab rate | No TDS |
| NFT sale | VDA transfer — same 30% regime | 30% + cess | 1% |
| Crypto gift from a non-relative | Gift income u/s 56(2)(x) if FMV > ₹50,000 | Slab rate | — |
Gains on transfer of a received VDA (mining/staking/airdrop) are separately taxed at 30% u/s 115BBH; the receipt itself is taxed at slab as above.
Why Crypto Losses Cannot Save You Tax
Section 115BBH computes tax on each VDA gain independently. A loss on one coin cannot reduce the gain on another, cannot offset salary or share-trading gains, and cannot be carried forward to a later year. This is far stricter than the normal capital-loss set-off rules.
Bitcoin at a gain
Ethereum at a loss
Even though the portfolio made a net ₹1 lakh gain, tax is charged on the full ₹3 lakh Bitcoin gain — the ₹2 lakh Ethereum loss is simply disallowed. Contrast this with the set-off rules for other income.
The 1% TDS under Section 194S is deducted on the full sale consideration even when you sell at a loss. Frequent traders can therefore have significant TDS locked up; you recover it only by claiming the credit in your ITR against your final tax or as a refund.
Traded across multiple exchanges and P2P? Get your VDA gains and TDS reconciled.
File Crypto ITR →1% TDS on Crypto Transfers
Section 194S applies to transfers of VDAs. TDS is 1% of the sale consideration (not of the profit) and applies even on a loss-making sale.
- Threshold: ₹50,000 in a financial year for most payers; ₹10,000 for "specified persons" (individuals/HUFs below the tax-audit turnover limits)
- On Indian exchanges: the exchange deducts and deposits the 1% TDS automatically; it reflects in your Form 26AS / AIS
- On P2P trades: the buyer must deduct 1% and deposit it (Form 26QE) before paying the seller
- Claim the credit: match 194S TDS against your Form 26AS and claim it in the ITR — any excess is refundable
- No TDS on mining, staking, airdrops or gifts — 194S covers only transfer consideration
VDA Tax vs Listed Shares
Compared to listed equity, VDAs are taxed far more strictly — no long-term concession, no ₹1.25 lakh exemption and no loss relief.
| Feature | VDA / Crypto (115BBH) | Listed Equity (111A / 112A) |
|---|---|---|
| Short-term rate | 30% + cess | 20% STCG (111A) |
| Long-term rate | 30% (no LTCG relief) | 12.5% LTCG (112A) |
| Annual exemption | None | ₹1.25 lakh (112A) |
| Loss set-off | Not anywhere | STCL / LTCL as per rules |
| Loss carry-forward | Not allowed | Up to 8 years |
| Deductions | Cost of acquisition only | Cost (+ business expenses if trading) |
| TDS on sale | 1% u/s 194S | No TDS (STT applies) |
Capital-gains rates on listed equity are as amended w.e.f. 23 July 2024. Confirm your position with a professional.
How to Report Crypto in Your ITR
- Consolidated exchange transaction & P&L report
- AIS / TIS downloaded from the portal
- Form 26AS reconciled for 194S TDS
- Cost of acquisition for every VDA
- Crypto-to-crypto swaps valued at FMV
- Mining/staking/airdrop receipts (Schedule OS)
- ITR-2 (investor) or ITR-3 (trader/miner)
- Schedule VDA filled transaction-wise
- Wallet self-transfers excluded (not a transfer)
- Return e-verified within the time limit
Anyone with VDA income must file ITR-2 (as an investor) or ITR-3 (as a trader/miner) — ITR-1 (Sahaj) is not permitted. Non-disclosure of VDA transactions can attract a notice and penalty under Section 270A, so report every transfer even where TDS was already deducted.
Want a CA to compute your 30% VDA tax and reconcile 194S TDS?
File Crypto ITR →Crypto Tax in India — Frequently Asked Questions
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Our CA-led team computes your flat 30% VDA tax, reconciles every 194S TDS entry across exchanges and P2P, files Schedule VDA in ITR-2 or ITR-3 and claims your refunds — 100% online, across India.