Fact-checked and reviewed by Kshitij Shah (BitNine), Chartered Accountant.
Do you have crypto investments? Crypto transactions are becoming more prevalent, from investors buying and selling crypto at a profit to paying for goods and services using digital assets.
As a result, the Ministry of Finance in India has adjusted the tax code to collect tax revenue from certain crypto transactions. Regardless of whether you have dozens of coins or just one, it’s important to be aware of crypto tax in India to stay compliant with the government and avoid an unexpected tax bill.
In this comprehensive guide, we’ll explore the details of crypto tax in India, including the types of assets subject to taxation, the exact tax rates, real-world examples, regulatory changes, and smart strategies for traders and investors.
Key takeaways
- Crypto gains in India are taxed at a flat 30% under Section 115BBH, with no deductions allowed except the cost of acquisition.
- A 1% TDS (Section 194S) applies to most crypto sales and crypto-to-crypto trades, calculated on the gross transaction value and withheld even on losses.
- A 4% health and education cess is added on top of the 30% tax.
- Crypto losses cannot be offset against gains or any other income, and they cannot be carried forward to future years.
- Certain crypto received (airdrops, mining, staking, gifts over INR 50,000, and salary) is taxed at your income tax slab rate at the time of receipt.
- For AY 2026-27, crypto gains must be reported under Schedule VDA in ITR-2 or ITR-3.
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How is Crypto Taxed in India?
Crypto transactions are subject to a few different taxes in India. Before we explore those, it’s essential to understand what is considered a taxable event. There are three primary scenarios that trigger crypto tax in India:
- Selling crypto for fiat (like INR or USD)
- Trading one crypto for another, including stablecoins
- Using crypto to pay for goods and services
Each of these triggers either income or capital gains tax liabilities, depending on the context.
30% Crypto Tax (Section 115BBH)
Section 115BBH of the Income Tax Act imposes a flat 30% tax on crypto gains, without allowing deductions for any expenses (except the cost of acquisition).
Let’s say you bought crypto for INR50,000 and sold it for INR75,000. You held it for three years and paid INR2,000 in broker fees. Your 30% tax will be levied on the full INR25,000 gain, and the INR2,000 fee will not reduce your tax liability.
Note: FIFO Method for Cost of Acquisition
India generally follows the FIFO (First In, First Out) method for calculating the cost of acquisition when you sell crypto. This means the oldest units you purchased are assumed to be the first ones sold. In a rising market, this typically results in a lower cost of acquisition and therefore higher taxable gains, making accurate record-keeping all the more important.
Income Tax at Slab Rate
Not all crypto income is taxed at the flat 30% rate under Section 115BBH. Certain types of crypto received — rather than traded — are treated as ordinary income and taxed at your applicable income tax slab rate (5%–30%), added to your total annual income for the year alongside salary and other earnings.
This slab-rate treatment applies when you receive crypto through:
- Airdrops (if the tokens are traded on an exchange or DEX at the time of receipt)
- Mining rewards (at the fair market value on the date of receipt)
- Staking and yield farming rewards (at the fair market value on the date of receipt)
- Gifts from non-relatives exceeding INR 50,000 in a financial year
- Hard forks (new coins received)
- Salary received in crypto
When you later sell, swap, or spend any of these assets, the 30% VDA tax applies on the gain, with the value already taxed at receipt used as your cost of acquisition.
Note: The 30% VDA tax (Section 115BBH) and slab-rate income are calculated separately — VDA gains are not added to your regular income for the purpose of determining your tax bracket.
1% TDS (Section 194S)
Effective 1 July 2022, India began withholding a 1 % tax deducted at source (TDS) on every crypto sale. The tax is calculated on the gross transaction value, not on your profit, and applies to:
- Sales for INR
- Crypto-to-crypto trades
TDS is withheld even on loss-making transactions.
Example
| Item | Amount |
| Gross sale price | INR 75,000 |
| Net profit | INR 25,000 |
| TDS @ 1 % of INR 75,000 | INR 750 |
| Net amount you receive | INR 74,250 |
Because the buyer must deduct TDS at the time of the trade, the net amount (INR 74,250 in this example) is what lands in your account. Double-check these figures when preparing your tax return.
Paying the TDS
Form 26QE
- Remit the deducted tax within 30 days from the end of the month in which the deduction was made.
Higher TDS Rate (Section 206AB)
- If you haven’t filed your ITR in the past two years and your total TDS exceeded INR 50,000, the rate may rise to 5 % .
4% Health and Education Cess
Most crypto transactions will be subject to a 30% tax and the 1% TDS; however, there is a third tax to be aware of. An additional 4% health and education cess is assessed on crypto spot trading transactions. Spot trading involves the immediate buying and selling of a digital asset.
For example, you might purchase crypto in the morning, wait for the price to go up, then sell in the afternoon. This tax can also apply when receiving crypto as wages.
For instance, if your 30% tax on crypto profits amounts to INR30,000, an additional INR1,200 (4%) is added, making your final liability INR31,200.
Disallowance of Loss Offsetting
You cannot use crypto losses to offset crypto gains—or any other gains. Also, losses cannot be carried forward to future years.
For example, if you have a crypto gain of INR 100,000 and a crypto loss of INR 10,000, a 30% tax will be assessed on the gain of INR 100,000. The loss is not eligible to lower your crypto gains.
What Types of Assets are Subject to Crypto Tax in India?
Hon’ble Finance Minister, Mrs. Nirmala Sitharaman, first announced changes to virtual assets in the Union Budget 2022, broadly defining digital assets as Virtual Digital Assets (VDAs), making them subject to the same tax treatment.
Let’s cover a few subsections of crypto transactions and the associated tax impact.
Crypto Taxes in India on Airdrops
When a new token or NFT is launched, companies will test the waters by airdropping them to investors. Although this is not a direct investment, sales of airdrops are considered a taxable event.
Airdrops are taxed in two stages. On receipt, the fair market value (FMV) of the tokens on the date of receipt is added to your total annual income and taxed at your applicable income tax slab rate (5%–30%), alongside your other income such as salary. If the tokens are not traded on any exchange or DEX at the time of receipt, no tax is due at that point. When you later sell, swap, or spend those tokens, the 30% VDA tax applies on any gain — that is, the sale price minus the FMV already taxed at receipt (which becomes your cost of acquisition) — plus 4% cess and 1% TDS on the gross sale value.
Crypto Taxes in India on Mining
The ITD has not yet clarified the taxation of crypto mining, but mined crypto is considered taxable income for the year and subject to 30% tax when sold. Mining may also be considered business income if conducted professionally. Consult your tax accountant for your personal circumstances.
Crypto Taxes in India on DeFi Transactions
Earnings from staking, yield farming, or lending may be considered income and taxed at slab rate when received. Selling such crypto triggers the 30% tax. Activities, such as farming, crypto lending, and crypto borrowing, can be considered income, even if you haven’t sold the digital assets.
Let’s say that you are starting a new crypto lending business. You decide to lend INR 150,000 in exchange for a 10% interest rate. The interest income earned during the year is taxable income. While there might not be a 30% tax imposed on the transaction, you will still need to pay taxes on any interest income generated.
Crypto Taxes in India on Non-Fungible Tokens
Alterations to the Union Budget were broad and apply to all digital assets, including non-fungible tokens (NFTs). NFTs purchased and sold follow the same rules as crypto, with profits being subject to the 30% tax. Additionally, the 4% cess may also apply. For example, if you bought and sold an NFT for a INR 10,000 profit, you would be taxed on this gain at 30% plus any applicable cess and TDS.
Crypto Taxes in India on Gifts and Donations
Crypto received as a gift is taxed in the hands of the recipient. If the total value of gifts from non-relatives exceeds INR 50,000 in a financial year, the full amount is treated as Income from Other Sources and taxed at your applicable income tax slab rate (5%–30%), added to your other annual income for the year — not at a flat 30%.
For example, if you receive crypto worth INR 80,000 from a friend, the entire INR 80,000 is added to your taxable income and taxed at your slab rate. If you later sell that crypto, any gain over the value already taxed at receipt is subject to the 30% VDA tax plus 4% cess and 1% TDS.
The gift is not taxed if:
- It’s from a relative
- It’s under INR 50,000 in a financial year
See Section 56(2)(x) for exemptions.
Receiving Crypto as Wages
Crypto received as wages is potentially subject to two rounds of taxation.
If your salary is paid in crypto:
- It’s taxed under your income tax slab as regular income
- When sold later, the 30% VDA tax applies
Once sold, any profits will be subject to a 30% tax, the 1% TDS, and the 4% cess. Even if you sell the crypto for a loss, you will still be required to pay the 1% TDS.
How to Pay Crypto Tax in India
Crypto tax in India is paid depending on the type of tax.
- File your 30% crypto tax and 4% cess during your annual ITR
- File TDS via Form 26QE
- Reconcile Form 26AS for all TDS details
In most cases, the crypto exchange handling the transaction will deduct and pay TDS on your behalf. However, you may still need to report your portion of TDS paid when filing your Income Tax Return.
For AY 2026–27 (FY 2025–26), the ITR filing deadline for most individuals (non-audit cases) is 31 July 2026. A belated return may be filed up to 31 December 2026 with a late fee of INR 5,000 under Section 234F (INR 1,000 if total income is below INR 5 lakh).
Crypto gains must be reported under Schedule VDA in ITR-2 (if treating gains as capital gains) or ITR-3 (if treating crypto activity as business income).
Transferring Crypto Between Your Own Wallets is Tax-Free
Moving crypto between wallets that you own — for example, from an exchange to a hardware wallet, or between two exchange accounts in your name — is not a taxable event. Because the ownership of the crypto does not change, this does not constitute a "transfer of VDA" under the Income Tax Act. You should keep clear records of all such transfers for documentation purposes.
Simply Holding Crypto (HODLing) is Tax-Free
Holding crypto without selling, trading, or spending it does not trigger any tax liability. Tax applies only when you dispose of your crypto through a sale, swap, or other transfer.
Changing Regulations: Budget 2026
The Union Budget 2026–27 maintained the existing VDA taxation framework without changes to tax rates. However, it introduced a significantly tighter penalty regime effective from 1 April 2026: a fine of INR 200 per day for failure to furnish VDA transaction statements, and a fixed penalty of INR 50,000 for inaccurate reporting. Under-reporting of income continues to attract penalties of 50%–200% of tax evaded under Section 270A, and wilful concealment can result in prosecution with potential imprisonment of up to seven years under Section 276C.
India is also targeting adoption of the OECD Crypto-Asset Reporting Framework (CARF) by April 2027, which will require automatic reporting of offshore crypto transactions to Indian tax authorities. This means holdings on international exchanges such as Binance Global or Coinbase will no longer be invisible to the ITD (Income Tax Department).
Strategies for Simplifying Tax Filings
Although you won’t be able to legally avoid paying crypto taxes in India, there are some strategies you can adopt to simplify tax filings.
Understanding Reporting Requirements
To comply with Indian regulations, all crypto exchanges are required to deduct and deposit TDS on behalf of their users. While most crypto platforms already have the necessary infrastructure to handle compliance (i.e., Automatic deduction of the 1% TDS at the time of transaction), it’s still important to understand your reporting requirements. For example, if you make a crypto sale outside of a regulated platform (i.e., P2P transactions or when using unregulated overseas exchanges), you need to be sure that the necessary TDS is withheld and submitted. Unlike a 30% tax rate, TDS is required to be remitted throughout the year based on the transaction date.
TDS Refund
To claim a refund for the TDS deducted by the exchange, you must file your Income Tax Return (ITR) at the end of the financial year. If the total TDS deducted exceeds your actual tax liability, the excess amount may be refunded after processing your ITR, based on the records reflected in Form 26AS.
Stay Informed
India has already confirmed the need to streamline reporting and requirements. The changes to the 2025-2026 reporting are likely only the beginning. As India continues to explore the role of crypto in the economy, regulations will continue to change. Staying informed about the latest regulatory updates will unlock new tax planning opportunities and maximize compliance.
Use a crypto profit and loss Calculator
Crypto tax in India can quickly add up, which is why it’s important to forecast your upcoming tax liability. Using a profit and loss calculator will help you understand the different taxes your transaction will be subject to, giving you the ability to set aside money for tax time. Profit and loss calculators tools likecryptact can also help you determine if a transaction is worth pursuing, especially if you are on the cusp of a loss.
Why Choose cryptact?
- Effortlessly import all your transactions from major exchanges, wallets, DeFi, and NFTs—no manual entry required.
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