Crypto Taxes India

30% flat tax on VDAs, 1% TDS on every transfer, no loss offsets.

Tax year 2025 · filing year 2026

Reviewed by Stephan Kulik · Last updated: 2026-04-21 · How we rank

Short answer

India has one of the world\'s strictest crypto tax regimes. 30% flat tax on gains (Section 115BBH, from first rupee, no exemption threshold). 1% TDS on every transfer above INR 10,000 (Section 194S). Losses cannot be offset against other income or other crypto. Only cost of acquisition is deductible. Applies to Indian residents regardless of exchange location. Not tax advice — consult a CA.

The Indian crypto tax regime

India introduced Section 115BBH of the Income Tax Act in April 2022, creating a dedicated Virtual Digital Asset (VDA) tax framework. Prior to this, crypto was in a grey zone. The regime established clarity but at punitive rates.

Section 115BBH: the 30% flat tax

Applies to all income from transfer of VDAs (cryptocurrencies, NFTs, tokens)
Rate: 30% flat (plus applicable cess and surcharge)
Only the cost of acquisition is deductible — no other expenses
Losses cannot be set off against any other income (crypto or non-crypto)
Losses cannot be carried forward to future years
No short-term / long-term distinction
No indexation benefit

Example: you buy 1 BTC at INR 40 lakh and sell 8 months later at INR 60 lakh. Gain = INR 20 lakh. Tax = 30% × INR 20 lakh = INR 6 lakh + cess. You also cannot offset this gain with any losses on other crypto or other assets.

Section 194S: the 1% TDS

A 1% TDS applies on every transfer of a VDA above INR 10,000 (INR 50,000 for specified persons under limited circumstances). The TDS is:

Deducted by the exchange automatically for trades on Indian-domiciled exchanges
Required to be self-deducted for peer-to-peer or off-exchange transfers (buyer obligation)
Creditable against final tax liability (if your tax = 30% of gain, you\'ve already paid 1% of proceeds; the remainder is owed at year-end, or you can claim refund if over-withheld)
Due for foreign-exchange trades too (Indian resident obligation to deduct)

Practical impact: 1% TDS on every transaction compounds for active traders. 100 round-trips effectively take 2% of capital (1% on each side). Indian crypto volumes dropped significantly post-2022 as traders moved to offshore exchanges — though that creates its own reporting complexity.

What you cannot deduct

Critically, the Indian regime disallows deductions beyond cost of acquisition:

Trading fees paid to exchanges — not deductible
Infrastructure costs (VPN, hardware wallets, software) — not deductible
Interest on loans used to buy crypto — not deductible
Tax-preparation costs — not deductible against crypto income specifically
Losses on other crypto transactions — not deductible
Salary or business expenses — not deductible against crypto

Staking, mining, airdrops, gifts

Staking rewards: income at FMV on receipt, taxed at 30%.
Mining: income at FMV on receipt, taxed at 30%. Mining equipment is NOT deductible (falls under the 115BBH disallowance).
Airdrops: taxed at 30% at receipt.
Gifts received (from non-relatives, above INR 50,000/year): taxed as gift income at marginal rates (not 30% VDA rate).
Gifts to relatives: generally exempt; relatives include spouse, parents, children, siblings.

Foreign exchanges + Indian residents

Using Binance, Bybit, Coinbase, or other foreign exchanges does not exempt Indian residents from Indian tax. Challenges:

TDS is the resident\'s obligation — technically the buyer must deduct 1% even on foreign exchange trades
Remittance of INR to foreign exchanges falls under LRS (Liberalised Remittance Scheme) limits — currently USD 250,000/year
The Income Tax Department has sought data from major foreign exchanges; compliance uncertain
OECD CARF brings automatic international reporting starting 2025-2027
Non-reporting penalties are severe — up to 200% of tax owed plus interest

Where to hold crypto from India

Indian-domiciled exchanges (CoinDCX, CoinSwitch, WazirX, ZebPay, Bitbns): automated TDS, INR trading pairs, compliance simpler but volumes compressed post-2022.
Self-custody (hardware wallet): no TDS on holding, only on disposal. Self-custody itself is not a taxable event.
Foreign exchanges: broader liquidity but compliance risk higher.

See best crypto banks in India for the current platform landscape.

Recordkeeping

Keep for at least 6 years:

Date and time of every transaction
Asset, quantity, INR value at transaction time
Counterparty (exchange name, wallet address)
TDS certificates (Form 16A) from exchanges
Supporting bank/UPI transaction records

Where to report

Schedule VDA on ITR-2 or ITR-3 (depending on whether classified as business income). TDS certificates (Form 16A) from exchanges are reconciled against TRACES Form 26AS.

Disclaimer

This page is general information, not tax advice. The Indian crypto tax regime has been amended multiple times since 2022; CBDT clarifications continue to refine specifics. Consult an Indian CA familiar with cryptocurrency. See terms.

Frequently asked questions

How is crypto taxed in India? +

India has a dedicated crypto-taxation regime since April 2022. Virtual Digital Assets (VDAs) — including cryptocurrency, NFTs, and tokens — are taxed at a flat 30% on gains (Section 115BBH of Income Tax Act). Additionally, a 1% TDS (Tax Deducted at Source) applies on every crypto transfer above INR 10,000 (Section 194S). Unlike most countries, losses on one crypto cannot be offset against gains on another, and no deductions are allowed beyond cost of acquisition. This is among the strictest crypto tax regimes globally.

What is the 1% TDS and how does it work? +

Section 194S requires a 1% TDS (Tax Deducted at Source) on every transfer of a VDA. For Indian exchanges, the exchange deducts 1% from the seller's proceeds automatically. For peer-to-peer or off-exchange transfers, the buyer is technically obligated to deduct TDS. The 1% is creditable against your final tax liability at year-end — if your total tax is less than what was withheld, you get a refund. In practice, the 1% TDS has significantly reduced Indian exchange volume (traders moved to offshore platforms or self-custody).

Can I offset crypto losses against other income in India? +

No. This is a key harshness of the Indian regime. Losses on Bitcoin cannot be offset against gains on Ethereum; crypto losses cannot be offset against stock gains or salary income. Each VDA transaction stands alone. You can only deduct the cost of acquisition; no transaction fees, no infrastructure costs, no other expenses are deductible. This severely limits the tax efficiency of active trading.

Are there exemptions for small gains? +

No — the 30% rate applies from the first rupee of gain. No de minimis threshold. However, the 1% TDS only kicks in for transactions above INR 10,000 (raised from INR 50,000 threshold debate). Gifting or receiving crypto as a gift may be taxed under separate gift-tax rules (taxed at marginal rates for the recipient above INR 50,000 from non-relatives).

What if I use foreign exchanges? +

Indian tax applies to Indian residents regardless of where the exchange is located. Using Binance, Bybit, or Coinbase does not exempt you from Indian tax. Challenges: foreign exchanges typically don't withhold 1% TDS (it's the responsibility of the Indian taxpayer to deduct and remit), foreign-exchange reporting under the Liberalised Remittance Scheme applies, and the Income Tax Department has sought data from major foreign exchanges. OECD CARF extends automatic international reporting to crypto, phasing in 2025-2027.

How are staking and airdrops taxed? +

Staking rewards, lending income, and airdrops are treated as income from VDAs at 30%. Cost basis of the rewards = FMV on receipt (or zero if truly unsolicited, though tax authorities often contest this). On later disposal, an additional 30% event applies to any gain since receipt. Mining income is similarly taxed at 30%.

What are Indian-domiciled exchanges? +

Major Indian exchanges in 2026: CoinDCX, CoinSwitch Kuber, WazirX (note: WazirX had a 2024 security incident), ZebPay, Unocoin, Bitbns. Advantage: automated 1% TDS and Indian-rupee INR pairs. Post-2022 tax regime has compressed volumes at Indian exchanges; many sophisticated users moved to foreign exchanges or self-custody, though this creates its own tax-reporting complexity.