Crypto tax in India works on its own rules. Gains from selling or swapping a virtual digital asset (VDA), the law’s term for cryptocurrencies, non-fungible tokens and similar tokens, are taxed at a flat 30%. Only the cost of buying the asset can be deducted, losses cannot be used to reduce any other income, and 1% of the sale value is usually deducted as tax at source when you sell.

Those rules were first written into the Income-tax Act, 1961 in 2022. From 1 April 2026 the Income-tax Act, 2025 has replaced it, and the crypto provisions moved to new section numbers with the same substance. Which Act applies depends on when you sold.

Income-tax Act, 1961 (sales up to 31 March 2026) Income-tax Act, 2025 (tax year 2026-27 onwards)
Definition of VDA Section 2(47A) Section 2(111)
30% tax on VDA income Section 115BBH Section 194(1), Table entry 4
1% TDS on transfer Section 194S Section 393(1), Table entry 8(vi)

Source: Income-tax Act, 2025 as amended by the Finance Act, 2026, and the Income-tax Act, 1961, both published by the Income Tax Department.

The 30% tax and what you can deduct

Under section 194 of the 2025 Act (Table entry 4), “any income from the transfer of any virtual digital asset” is taxed at 30%, whoever earns it. The rest of your income is taxed separately, as if the crypto income were not there. The section applies the Act’s meaning of “transfer” to a VDA “whether capital asset or not”, so it makes no difference whether you hold crypto as an investment or trade it often, or how long you held it.

The conditions attached to that 30% are strict. No deduction is allowed for “any expenditure (other than cost of acquisition, if any) or allowance”. In practice, the price you paid for the token is the only thing you subtract from the sale value. Other spending connected with your crypto activity, and allowances that reduce other kinds of income, do not count.

The 30% is the rate set in the Act. Surcharge, where it applies, and health and education cess are added on top, as they are on other income; our income tax calculator for 2026-27 explains how those are worked out for the rest of your income.

For crypto you sold up to 31 March 2026, the same rules come from section 115BBH of the 1961 Act, which also taxes VDA income at 30% and allows no deduction other than cost of acquisition.

Losses: no set-off, no carry forward

This is where crypto differs most from shares or mutual funds. Section 194 says no set-off of any loss is allowed in computing VDA income, a loss from transferring a VDA cannot be set off against income under any other provision, and it “shall not be allowed to be carried forward to succeeding tax years”.

Take an illustration. Suppose that in one tax year you make a gain of ₹1,00,000 on one token and a loss of ₹40,000 on another. Each transfer is computed on its own: the ₹1,00,000 gain is taxed at 30%, which is ₹30,000 before surcharge and cess, and the ₹40,000 loss is simply lost. It reduces neither this gain nor your salary or other income, and it cannot be used next year.

The income tax return follows the same logic. In Schedule VDA of the ITR-2 form for assessment year 2026-27, notified by the CBDT in Notification No. 46/2026, “every ‘transfer’ is a transaction” to be listed separately, with the date of acquisition, date of transfer, cost of acquisition and consideration received. The income column says “enter nil in case of loss”, and only positive amounts are totalled.

The 1% TDS when you sell

Section 393(1) of the 2025 Act, Table entry 8(vi), requires any person paying “any sum by way of consideration for transfer of a virtual digital asset” to a resident to deduct income-tax at 1%. It is deducted when the amount is credited or paid, whichever is earlier. The 1961 Act did the same under section 194S.

The TDS is not an extra tax on top of the 30%. It is collected in advance against your final tax for the year, so it counts towards what you owe when you file your return.

There are small-value exemptions in the table under section 393(4) (entry 12). No tax is deducted if the total consideration in the tax year does not exceed:

  • ₹50,000, when the payer is an individual or Hindu undivided family that has no business or professional income, or whose business turnover did not exceed ₹1 crore (or professional receipts ₹50 lakh) in the previous tax year;
  • ₹10,000, when the payer is anyone else.

Swaps are covered too. Where the consideration is another VDA with no cash, or is wholly or partly in kind with too little cash to cover the TDS, Note 6 to section 393(1) says the payer must ensure the tax has been paid before releasing the consideration.

What platforms report

The 2025 Act adds a separate reporting duty. Section 509 requires reporting entities, as prescribed, to furnish information on transactions in crypto-assets to the tax authorities in a statement. This sits alongside the TDS: one collects tax, the other gives the department a record of trades.

A short checklist

  1. Work out each sale or swap separately: sale value minus the price you paid.
  2. Pay 30% on each gain; expect surcharge and cess on top where they apply.
  3. Do not net off losses, and do not carry them forward.
  4. Check that the 1% TDS deducted on your sales is credited to your PAN, and claim it in your return.
  5. List every transfer in Schedule VDA when you file.

This is a description of the law, not advice on whether to buy or sell any asset.

Questions

What is the crypto tax rate in India?

Income from transferring a virtual digital asset is taxed at 30% under section 194 of the Income-tax Act, 2025 (section 115BBH of the 1961 Act for earlier years), plus any surcharge and cess.

Can I set off crypto losses against gains?

No. A loss on one VDA cannot be set off against a gain on another, against any other income, or carried forward to later years.

Is the 1% TDS on crypto a separate tax?

No. It is deducted at source on the sale value and is adjusted against your total tax liability when you file your return.

Does it matter how long I held the crypto?

No. The 30% rate applies to VDA income whether the asset is a capital asset or not, with no separate rate for long holdings.

Sources