Crypto Tax India 2026 Guide: 30% + 1% TDS Explained
Complete guide to crypto tax India 2026: 30% tax on gains, 1% TDS on every transfer, ITR filing under VDA schedule. Penalties, exemptions, and legal status explained.
1. What is the Crypto Tax Regime in India (2026)?
India taxes virtual digital assets (VDAs) – including cryptocurrencies, NFTs, and tokenised assets – under Section 115BBH of the Income Tax Act. The rules, effective since April 1, 2022, remain unchanged in Budget 2026. Key provisions: 30% tax on any income from transfer of VDAs, no deduction except the cost of acquisition, and no set‑off of losses from one VDA against another or against any other income. Additionally, 1% TDS is deducted on every VDA transfer exceeding ₹10,000 in a financial year (₹50,000 for specified persons). This TDS is credited against your final tax liability when you file your ITR. There is no grandfathering, and no indexation benefit. Therefore, crypto is taxed more harshly than equity, debt, or gold.
See our Crypto Sentiment India 2026 for market context.
2. How 1% TDS Works on Crypto Transactions
| Transaction type | TDS applicable | Threshold |
|---|---|---|
| Crypto to INR sale on exchange | Yes, 1% | ₹10,000 in a FY |
| Crypto to crypto swap (BTC to ETH) | Yes, 1% on fair market value | ₹10,000 |
| Gift of crypto | No TDS, but recipient pays 30% tax | N/A |
| P2P transfer (non‑exchange) | Buyer must deduct 1% TDS | ₹10,000 |
The exchange deducts TDS at the time of transaction. You can claim credit for this TDS when filing your ITR. However, TDS is not the final tax – if your 30% tax liability is higher than TDS deducted, you must pay the difference as self‑assessment tax. Conversely, if TDS exceeds your tax liability (rare, but possible if you made many small trades at a loss), you can claim a refund. Therefore, keep detailed records of all transactions, including TDS certificates from exchanges. Use INDwallet’s crypto tracking features to consolidate this data.
3. How to Compute Tax on Crypto Gains (Step by Step)
The computation is straightforward but strict. Example: You bought 1 Bitcoin at ₹40 lakh and sold it at ₹60 lakh. Your gain is ₹20 lakh. Tax payable = 30% of ₹20 lakh = ₹6 lakh. Additionally, TDS of 1% on the sale value (₹60 lakh * 1% = ₹60,000) was deducted by the exchange. You claim ₹60,000 as TDS credit. The net tax payable = ₹6,00,000 – ₹60,000 = ₹5,40,000 plus 4% health and education cess = ₹5,61,600. If you made a loss – say you sold at ₹35 lakh – you cannot set off that loss against any other gain (neither crypto nor equity). You simply report the loss, but it cannot reduce your tax liability. This asymmetrical treatment makes crypto highly punitive for active traders. Only long‑term, buy‑and‑hold strategies make sense from a tax perspective.
🧮 Interactive Tax Calculator (Illustrative)
4. How to File Crypto Tax in ITR (VDA Schedule)
From AY 2023-24 onwards, the ITR forms (ITR-2, ITR-3) contain a specific schedule for VDAs: Schedule VDA. You must report:
- Date of acquisition and date of transfer
- Cost of acquisition (purchase price + any fees, no other deduction)
- Sale consideration (selling price)
- Capital gains (difference)
- TDS deducted (as per Form 26AS)
If you have multiple transactions, aggregate them by financial year. Many exchanges provide a tax report (e.g., CoinDCX tax statement). For transactions on international exchanges (Binance, etc.) or P2P, you must self‑compute and report. Failure to report VDA income can lead to a penalty of 50% to 200% of the tax due, plus interest under sections 234A, 234B, 234C. Therefore, even if you made a loss, file ITR and report the loss (even though it cannot be set off, reporting establishes a record). Use INDwallet’s Tax Regime Simulator to compare old vs new regime impact on your overall tax if you have other income.
5. Common Mistakes and Penalties to Avoid
Not reporting crypto at all
Income Tax department gets data from exchanges via SFT (Statement of Financial Transactions). Non‑disclosure leads to scrutiny and penalties.
Incorrect cost of acquisition
You cannot deduct trading fees, internet costs, or electricity. Only the actual purchase price plus any explicit acquisition cost.
Ignoring TDS credits
TDS deducted by exchanges appears in Form 26AS. If you don’t claim it, you effectively pay tax twice.
Treating crypto as business income
Unless you are a professional trader with high volume, crypto is “capital gains”. Misclassification can invite penalties.
6. Crypto Tax for NRIs, Minors, and Gifts
| Situation | Tax Treatment |
|---|---|
| NRI selling crypto on Indian exchange | 30% tax + 1% TDS (same as resident). No DTAA benefit because crypto not covered under most treaties. |
| NRI selling crypto on foreign exchange | Taxable in India if you are resident (stay >120/182 days). Must report in ITR. |
| Minor child receiving crypto as gift | Income clubbed with parent’s income. Parent pays 30% tax. |
| Gift of crypto to relative (spouse, sibling, etc.) | No tax for giver. Receiver pays 30% tax at the time of sale (on gain from fair market value at gift date). |
| Gift to non‑relative | If value > ₹50,000, receiver pays 30% tax at the time of receipt itself (income from other sources). |
For NRIs, additional compliance under FEMA may apply. Consult a tax advisor before making large crypto transfers across borders. Read our Crypto Sentiment article for broader investment perspective.
7. Legal Status of Crypto in India (2026) – Is It Illegal?
Crypto is not illegal in India. The Supreme Court in 2020 struck down the RBI circular that banned banks from dealing with crypto exchanges. Since then, the government has chosen to regulate via taxation rather than impose a blanket ban. However, crypto is not recognised as legal tender. The RBI has repeatedly warned about risks, and there is no deposit insurance or investor protection. A comprehensive regulatory framework (crypto bill) is pending – the latest draft (2024) proposed categorising crypto as an asset class, with registration requirements for exchanges. As of June 2026, the bill has not been passed. Therefore, while trading and holding crypto is legal, the lack of regulation means higher risk of exchange hacks, fraud, and sudden policy changes. Always use reputed, FIU‑registered exchanges (CoinDCX, WazirX, etc.) and never keep large amounts on an exchange. For long‑term holding, use a hardware wallet.
8. INDwallet Tools to Manage Crypto Tax & Portfolio
- Old vs New Tax Regime Simulator – Estimate total tax liability including crypto gains.
- Wealth Wallet – Add your crypto holdings as custom assets to track overall allocation and potential tax liability.
- Investment Quest – Simulate how after‑tax returns from crypto affect your long‑term goals.
- SIP vs Lumpsum Simulator – Compare systematic vs lump sum crypto purchases considering 1% TDS drag.
Frequently Asked Questions
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Stop guessing your tax liability. Use INDwallet’s Tax Regime Simulator to estimate your total tax including crypto gains. Then track all your crypto and traditional assets in Wealth Wallet – free, private, and India‑first.
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