Crypto Tax India 2026 Guide: 30% + 1% TDS Explained

Crypto Tax India 2026 Guide: Virtual digital assets (VDAs) including cryptocurrencies and NFTs are taxed at a flat 30% on gains under Section 115BBH, with no deduction except the cost of acquisition. A 1% TDS applies on every transfer exceeding ₹10,000 in a financial year. Losses from one VDA cannot be set off against another or against any other income. File using Schedule VDA in ITR-2 or ITR-3.

AI Summary: Crypto Tax India 2026

• Crypto gains are taxed at 30% plus 4% health and education cess — no slab rate benefit, no indexation.
• 1% TDS is deducted on every VDA transfer; claim it as credit when filing your ITR under Schedule VDA.
• Losses cannot be set off; only the cost of acquisition is allowed as a deduction — no trading fees, electricity, or internet costs.
• Use Tax Regime Simulator to see how crypto income affects your total tax under old vs new regime.

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 substantially unchanged in Budget 2026. The key provisions are: 30% tax on any income from the 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 in India.

See our Crypto Sentiment India 2026 for market context and how taxation affects investor behaviour.

2. How 1% TDS Works on Crypto Transactions

The exchange generally deducts TDS at the time of the 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 the 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 Wealth Wallet to track your crypto holdings alongside traditional assets.

3. How to Compute Tax on Crypto Gains (Step by Step)

The computation is straightforward but strict. For 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 are generally tax‑efficient from this perspective.

4. How to File Crypto Tax in ITR (VDA Schedule)

From AY 2023‑24 onwards, 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 plus any explicit acquisition fees; no other deduction)
• Sale consideration (selling price)
• Capital gains (difference between sale and cost)
• TDS deducted (as per Form 26AS)

If you have multiple transactions, aggregate them by financial year. Many Indian exchanges now provide a tax report or P&L statement. For transactions on international exchanges 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, and 234C. Therefore, even if you made a loss, it is advisable to file the ITR and report the loss — this establishes a record and may help in case of future scrutiny. Use INDwallet’s Tax Regime Simulator to compare old vs new regime impact when you have crypto income alongside salary or business income.

5. Common Mistakes and Penalties to Avoid

6. Crypto Tax for NRIs, Minors, and Gifts

For NRIs, additional compliance under FEMA may apply. It is generally advisable to consult a tax advisor before making large crypto transfers across borders. Read our Crypto Sentiment article for the 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 effectively 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 expressed concerns about risks, and there is no deposit insurance or investor protection mechanism for crypto holdings. A comprehensive regulatory framework (often referred to as the “crypto bill”) is pending — the latest draft 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. It is generally advisable to use reputed, FIU‑registered Indian exchanges and avoid keeping large amounts on any exchange. For long‑term holding, consider a hardware wallet. See our Gold vs Bitcoin India 2026 comparison for how the two assets differ in regulatory treatment.

8. INDwallet Tools to Manage Crypto Tax & Portfolio

• Old vs New Tax Regime Simulator: Estimate your total tax liability including crypto gains under both regimes. Try now.
• Wealth Wallet: Add your crypto holdings as custom assets to track overall allocation and potential tax liability. Open Wealth Wallet.
• Investment Quest: Simulate how after‑tax returns from crypto affect your long‑term financial goals. Start quest.
• SIP vs Lumpsum Simulator: Compare systematic vs lump sum crypto purchases considering the 1% TDS drag. Simulate now.

9. What Most People Miss: The Impact of 1% TDS on Active Trading

Many new crypto traders underestimate the cash flow impact of 1% TDS. If you trade frequently — say, buy and sell ₹1 lakh worth of crypto 50 times a year — you will have ₹50,000 (1% of ₹50 lakh total sale value) deducted as TDS, even if your net profit is only ₹10,000. This TDS is locked until you file your ITR and claim a refund, which can take 6‑12 months. For active traders, this creates a significant working capital drag. Moreover, since losses cannot be set off, you could end up in a situation where you have a net trading loss but still owe 30% tax on individual profitable trades. The Indian crypto tax structure, therefore, strongly discourages frequent trading and favours a buy‑and‑hold approach. Before you trade, use the SIP vs Lumpsum Simulator to compare the after‑tax outcome of systematic versus lump sum strategies.

10. From Confusion to Compliance: Your Crypto Tax Checklist

11. Decision Framework: What Should You Do Now?

• If you traded crypto in FY 2025‑26: Start gathering your transaction data now. File Schedule VDA before the ITR deadline (generally July 31).
• If you are holding crypto long‑term without selling: No tax is due until you transfer. No reporting is required for pure holding. Track your cost basis for future use.
• If you are an active trader: Consider the 1% TDS drag and 30% flat tax. Compare after‑tax returns with equity (12.5% LTCG) and gold (12.5% LTCG). Use Investment Quest to see which asset fits your goals.
• If you received crypto as salary or freelance payment: It is taxable as income at your slab rate (not 30% flat) and must be reported under the head “Income from Salaries” or “Profits and Gains from Business or Profession.”
• If you’re unsure about any aspect: Consult a chartered accountant familiar with crypto taxation. Use Tax Regime Simulator for preliminary estimates.

Explore More Crypto & Tax Resources

• Crypto Sentiment India 2026 — Market mood and investor behaviour.
• Gold vs Bitcoin India 2026 — Compare tax treatment and portfolio role.
• Wealth Wallet — Track your crypto alongside all other assets.