Crypto Tax India — VDA Taxation, TDS & ITR Reporting (FY 2025-26)

Q: What is the tax rate on crypto in India for FY 2025-26?

Cryptocurrency and all Virtual Digital Assets (VDAs) are taxed at a flat 30% under Section 115BBH of the Income-tax Act, 2025, regardless of holding period. Adding 4% Health and Education Cess makes the effective rate 31.2%. No deductions are allowed except the cost of acquisition — no brokerage, no transfer fees, no internet charges. This flat rate applies from FY 2022-23 onwards and there is no slab benefit or basic exemption limit advantage on VDA gains.

Q: Can crypto losses be set off against other income in India?

No. Losses from VDA (Virtual Digital Asset) transfers cannot be set off against any other income — not against salary, not against capital gains on shares, and not against any other income head. From FY 2022-23, VDA losses also cannot be set off against gains from other VDAs in the same year. From FY 2023-24 onwards, a loss from one VDA (e.g., Bitcoin at a loss) cannot offset the gain from another VDA (e.g., Ethereum at a profit) within the same financial year. Carry-forward of VDA losses to future years is also prohibited under Section 115BBH.

Q: What is TDS on crypto transactions under Section 194S?

Section 194S requires 1% TDS to be deducted on the consideration paid for transfer of a VDA when the transaction value exceeds ₹50,000 in a financial year (₹10,000 threshold for "specified persons" — individuals/HUFs with business/profession turnover below ₹1 crore/₹50 lakh). On Indian centralised exchanges like CoinDCX, WazirX, and Zebpay, the exchange automatically deducts TDS. For peer-to-peer (P2P) trades, the buyer is responsible for deducting and depositing TDS with the government. TDS is on sale consideration, not on profit — it applies even if you sell at a loss.

Q: How to report crypto in ITR for AY 2026-27?

Crypto income must be reported in Schedule VDA, introduced in ITR forms from AY 2023-24. You must report each transaction separately: name of VDA (Bitcoin, Ethereum, etc.), date of acquisition, cost of acquisition, date of transfer, and full sale consideration. Use ITR-2 if crypto is treated as investment/capital income. Use ITR-3 if you are a professional trader or miner reporting crypto as business income. ITR-1 (Sahaj) cannot be used for any VDA income. Download your exchange P&L report and cross-verify with Form 26AS/AIS for TDS credits under Section 194S.

Updated: 3 June 2026 | Section 115BBH & 194S, Income-tax Act, 2025 | AY 2026-27

Tax on cryptocurrency in India is levied at a flat 30% on gains from Virtual Digital Assets (VDAs) under Section 115BBH of the Income-tax Act, 2025. No deductions are allowed except cost of acquisition. VDA losses cannot be set off against any income. TDS at 1% under Section 194S applies on VDA sales above ₹50,000/year. Income must be reported in Schedule VDA in ITR-2 or ITR-3.

30%

Flat tax on all crypto/VDA gains — no slab benefit, no LTCG/STCG distinction
Effective rate 31.2% (30% + 4% cess). Applies from FY 2022-23. Section 115BBH, Income-tax Act, 2025.

⚠

No loss set-off, no carry-forward. Crypto losses cannot reduce your tax on salary, shares, or other crypto gains. From FY 2023-24, loss from one VDA (Bitcoin) cannot offset gain from another VDA (Ethereum) in the same year — each is computed independently.

VDA Tax vs Equity Shares — Key Differences

Understanding the contrast with equity shares helps taxpayers appreciate how strictly crypto gains are taxed compared to stock market investments.

Feature	VDA / Crypto (Sec 115BBH)	Equity Shares (Sec 111A / 112A)
Short-term tax rate (≤12 months)	30% + cess	20% STCG + cess
Long-term tax rate (>12 months)	30% + cess (no LTCG benefit)	12.5% LTCG + cess
LTCG exemption per year	None	₹1.25 lakh exempt
Indexation on cost	Not allowed	Not allowed (Budget 2024)
Loss set-off against gains	Cannot set off anywhere	STCL vs STCG/LTCG; LTCL vs LTCG
Loss carry-forward	Not allowed	8 years
TDS on sale	1% TDS (Section 194S)	No TDS (STT instead)
Deductions allowed	Cost of acquisition only	Brokerage (if business income)
Slab rate applicable	No — flat 30% always	Separate rate, not slab

Common Crypto Scenarios — Tax Treatment

Transaction	Tax Treatment	Rate	TDS?
Buy & sell crypto at profit	VDA gain under Section 115BBH	30% + cess	1% (exchange deducts)
Buy & sell crypto at loss	VDA loss — no set-off, no carry-forward	—	TDS on proceeds, not profit
Crypto-to-crypto swap (BTC → ETH)	Transfer of VDA — taxable at fair market value on swap date	30% + cess	1% (P2P: buyer deducts)
P2P sale	VDA transfer — buyer responsible for deducting 1% TDS	30% + cess	1% (buyer deducts)
Crypto mining reward	Business income or income from other sources; cost of acquisition = Nil	Slab rate on receipt value	No TDS on mining
Staking rewards	Income from other sources — taxable at fair value when received	Slab rate	No TDS on staking
NFT sale	VDA transfer — same 30% regime applies	30% + cess	1%
Airdrop received	Income from other sources at FMV on receipt date	Slab rate	No TDS on airdrops
Crypto gift from non-relative	Taxable as gift income under Sec 56(2)(x) if FMV > ₹50,000	Slab rate (Income from Other Sources)	—

TDS Under Section 194S — Crypto Buyers & Exchanges

Section 194S was introduced by Finance Act 2022. It applies to all transfers of VDAs on or after 1 July 2022. Key obligations:

Rate: 1% of the sale consideration (not 1% of profit)
Threshold: ₹50,000/year. For "specified persons" (individual/HUF with turnover < ₹1Cr / ₹50L or income below exemption limit): threshold is ₹10,000/year
On exchanges (CoinDCX, WazirX, Zebpay, etc.): Exchange deducts TDS automatically; reflected in Form 26AS and AIS
On P2P trades: The buyer must deduct 1% TDS from the payment and deposit it using Form 26QE (before making payment to seller)
TDS credit: Visible in Form 26AS; claim as advance tax credit in ITR to reduce final tax payable
No TDS on gift, mining, staking, airdrop — TDS under 194S is only on "sale/transfer" consideration

How to File ITR with Crypto Income

Crypto/VDA income is reported in Schedule VDA in ITR-2 or ITR-3. Steps to file correctly:

Download your full transaction history and P&L report from every exchange used during the year
Check Form 26AS / AIS on the income tax portal for pre-filled TDS data under Section 194S
Open ITR-2 (or ITR-3 for traders/miners) for AY 2026-27 on incometax.gov.in
Navigate to Schedule VDA and enter each transaction: VDA name, acquisition date, cost, transfer date, sale consideration
Verify TDS credit in Schedule TDS — ensure 194S TDS matches your 26AS data
Mining and staking income goes in Schedule OS (Income from Other Sources)

Note: ITR-1 (Sahaj) cannot be used by anyone with VDA income. Non-disclosure of VDA transactions can attract notice, penalty under Section 270A, and prosecution under the Income-tax Act.

Frequently Asked Questions

What is the tax rate on crypto in India for FY 2025-26?

Cryptocurrency and all Virtual Digital Assets (VDAs) are taxed at a flat 30% under Section 115BBH of the Income-tax Act, 2025, regardless of holding period. Adding 4% Health and Education Cess makes the effective rate 31.2%. No deductions are allowed except the cost of acquisition — no brokerage, no transfer fees, no internet charges. This flat rate applies from FY 2022-23 onwards and there is no slab benefit or basic exemption limit advantage on VDA gains.

Can crypto losses be set off against other income in India?

No. Losses from VDA (Virtual Digital Asset) transfers cannot be set off against any other income — not against salary, not against capital gains on shares, and not against any other income head. From FY 2022-23, VDA losses also cannot be set off against gains from other VDAs in the same year. From FY 2023-24 onwards, a loss from one VDA (e.g., Bitcoin at a loss) cannot offset the gain from another VDA (e.g., Ethereum at a profit) within the same financial year. Carry-forward of VDA losses to future years is also prohibited under Section 115BBH.

What is TDS on crypto transactions under Section 194S?

Section 194S requires 1% TDS to be deducted on the consideration paid for transfer of a VDA when the transaction value exceeds ₹50,000 in a financial year (₹10,000 threshold for "specified persons" — individuals/HUFs with business/profession turnover below ₹1 crore/₹50 lakh). On Indian centralised exchanges like CoinDCX, WazirX, and Zebpay, the exchange automatically deducts TDS. For peer-to-peer (P2P) trades, the buyer is responsible for deducting and depositing TDS with the government. TDS is on sale consideration, not on profit — it applies even if you sell at a loss.

How to report crypto in ITR for AY 2026-27?

Crypto income must be reported in Schedule VDA, introduced in ITR forms from AY 2023-24. You must report each transaction separately: name of VDA (Bitcoin, Ethereum, etc.), date of acquisition, cost of acquisition, date of transfer, and full sale consideration. Use ITR-2 if crypto is treated as investment/capital income. Use ITR-3 if you are a professional trader or miner reporting crypto as business income. ITR-1 (Sahaj) cannot be used for any VDA income. Download your exchange P&L report and cross-verify with Form 26AS/AIS for TDS credits under Section 194S.

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