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India’s crypto tax rules have been in place since April 1, 2022, when the government classified cryptocurrencies as Virtual Digital Assets (VDAs) and introduced a specific tax regime. This guide explains the complete picture of crypto taxes in India in 2026.
Important: This guide is for educational purposes. Tax laws are subject to change and individual circumstances vary. Always consult a qualified tax professional (CA or tax advisor) for advice specific to your situation.
Overview of Crypto Tax in India
Crypto taxation in India is governed by the Finance Act 2022, which introduced Section 115BBH and Section 194S to the Income Tax Act:
- 30% flat tax on income from transfer of VDAs
- 1% TDS (Tax Deducted at Source) on qualifying crypto transactions
- No loss set-off against other income sources
- No deduction except the cost of acquisition
What are Virtual Digital Assets (VDAs)?
The Income Tax Act defines VDAs broadly to include:
- Cryptocurrencies (Bitcoin, Ethereum, Solana, etc.)
- Non-fungible tokens (NFTs)
- Other digital assets as notified by the government
Stablecoins (USDT, USDC) are also classified as VDAs.
The 30% Flat Tax on Crypto Gains
Under Section 115BBH, income from the transfer of a VDA is taxed at a flat rate of 30% plus applicable surcharge and cess.
Key characteristics:
- No distinction by holding period: Unlike stocks (LTCG at 12.5% / STCG at 20%), crypto has the same 30% rate regardless of whether you held for one day or five years.
- No indexation benefit: You cannot adjust your purchase price for inflation when calculating gains.
- No deduction: The only deduction allowed is the cost of acquisition of the VDA.
- Gift tax: VDAs received as gifts are taxable at the recipient’s slab rate.
How to calculate crypto gains:
- Sale price − Cost of acquisition = Taxable gain
- Taxable gain × 30% = Tax owed (before surcharge and cess)
Example:
- You buy 1 ETH for ₹2,00,000 in January 2025
- You sell 1 ETH for ₹3,50,000 in March 2026
- Taxable gain = ₹1,50,000
- Tax = ₹1,50,000 × 30% = ₹45,000
The 1% TDS Rule (Section 194S)
Section 194S requires TDS to be deducted at 1% on payments for crypto transactions. This applies to:
- Transactions above ₹50,000 per year (for individuals and HUFs not subject to tax audit)
- Transactions above ₹10,000 per year (for others)
Who deducts TDS:
- Exchanges like ZebPay deduct TDS at the point of sale/exchange
- In peer-to-peer transactions, the buyer must deduct TDS before paying the seller
TDS is not a final tax. It is an advance payment against your total tax liability. TDS deducted can be claimed as credit in your ITR (Income Tax Return).
Loss Set-Off Restrictions
This is one of the most significant restrictions in India’s crypto tax regime:
You cannot:
- Set off crypto losses against income from salary, business, or other sources
- Set off crypto losses against gains from stocks or mutual funds
- Carry forward crypto losses to subsequent years (this point is debated; consult a tax professional)
You may be able to:
- Set off a loss from one VDA against a gain from another VDA in the same financial year (consult a tax professional on the current interpretation)
Crypto Tax Applicability: What Triggers a Tax Event?
Taxable events:
- Selling crypto for INR (profit)
- Exchanging one crypto for another (e.g., BTC to ETH) — this is treated as a disposal
- Using crypto to purchase goods or services
- Receiving crypto as income (mining, staking rewards, airdrops)
Generally not a taxable event:
- Buying crypto with INR
- Transferring crypto between your own wallets
How to File Crypto Tax in India
- Track all transactions (purchases, sales, exchanges) throughout the financial year
- Calculate gains for each transaction (sale price minus cost of acquisition)
- Calculate total gains/income from VDAs
- Report under Schedule VDA in your ITR-2 or ITR-3
- Claim credit for TDS deducted (Form 26AS or AIS)
- Pay advance tax if total liability exceeds ₹10,000
Tools for Crypto Tax Calculation
Several dedicated crypto tax platforms help Indian investors track and calculate tax:
- Koinly
- Crypto Tax India
- ClearTax (crypto module)
These tools can import transaction data from exchanges and generate tax reports.
Frequently Asked Questions About Crypto Tax in India
Is crypto legal in India?
Yes. Crypto is classified as a VDA and is legal to buy, hold, and trade in India subject to tax compliance.
Do I need to pay tax if I don’t sell my crypto?
No. Holding crypto without any transaction generally does not trigger a tax event.
What is TDS on crypto in India?
TDS at 1% is deducted by exchanges on qualifying crypto sales/exchanges. It is an advance tax — not an additional tax on top of the 30%.
Do I pay 30% on every rupee of crypto gains?
Yes. There is no basic exemption limit for VDA income. All gains from VDA transfers are taxed at 30%.
Can I avoid crypto tax in India?
No. Attempting to evade crypto tax carries significant penalties under the Income Tax Act. ZebPay and all Indian exchanges report transactions to tax authorities.
What if I received crypto as a gift?
VDAs received as gifts are taxable at the recipient’s applicable income tax slab rate if the fair market value exceeds ₹50,000 (above the limit for gifts from non-relatives).
How is staking income taxed?
Staking rewards are likely taxable as income at the market value when received, then again on disposal (gain taxed at 30%).
Final Thoughts
India’s crypto tax regime is clear in its intent: 30% flat tax, 1% TDS, and no loss set-off. While these rates are higher than many other asset classes, compliance is non-negotiable.
Keep detailed records of every transaction, file your ITR accurately, and consult a CA for complex situations.
Get started today and join 6 million+ registered users exploring crypto investing on ZebPay
Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Each investor must do his/her own research or seek independent advice if necessary before initiating any transactions in crypto products and NFTs. The information in this article is for educational purposes only and does not constitute financial or investment advice. Tax rules are subject to change; consult a qualified tax professional.
