India crypto tax
Crypto Tax in India: 30% Tax and 1% TDS Explained
India taxes crypto — Virtual Digital Assets — more strictly than most assets: a flat 30% on gains, a 1% TDS on transfers, and no way to offset losses. Here is how it works, in plain English.
In India, profit from crypto (classed as Virtual Digital Assets, or VDAs) is taxed at a flat 30% under Section 115BBH — plus any applicable surcharge and a 4% health & education cess — with no deduction allowed except the cost of acquisition. Separately, a 1% TDS under Section 194S is deducted on crypto transfers above ₹10,000 (₹50,000 a year for certain individuals). Crypto losses cannot be set off against any other income, nor even against gains from another crypto, and cannot be carried forward. These rules apply whatever your income-tax slab. This is general information, not tax advice — confirm the current position with a qualified chartered accountant.
The flat 30% tax (Section 115BBH)
Since FY 2022-23, profit on the transfer of any Virtual Digital Asset is taxed at a flat 30% under Section 115BBH, plus any applicable surcharge and a 4% health & education cess. This rate applies no matter your income slab, and no matter how long you held the asset — there is no long-term/short-term distinction and no indexation benefit. The only deduction allowed is the cost of acquisition. You cannot deduct trading fees, platform charges, interest on borrowed money, or any other expense.
The 1% TDS (Section 194S)
Separately from the 30% tax, a 1% Tax Deducted at Source applies under Section 194S on the transfer of a VDA where the value crosses ₹10,000 (or ₹50,000 in a year for certain individuals), in force since 1 July 2022. On an Indian exchange the platform usually withholds it automatically. The TDS is not an additional tax — it is credited against your final tax bill and reconciled through your Form 26AS / AIS — but because it is deducted on the transfer value (not the profit), active traders can see a meaningful amount of cash locked up through the year.
No loss set-off, no carry-forward
This is the rule that surprises most people. A loss on one crypto cannot be used to reduce the taxable gain on another crypto, cannot be set off against salary, business or any other income, and cannot be carried forward to a later year. In practice, every profitable disposal is taxed at 30% on its own, while losses simply fall away. That makes careless, high-frequency trading unusually expensive compared with other asset classes.
A worked example
Suppose you buy ₹1,00,000 of Bitcoin and later sell it for ₹1,50,000. Your gain is ₹50,000. Tax at 30% is ₹15,000, plus 4% cess (₹600) — about ₹15,600 in tax, before any surcharge. On the ₹1,50,000 sale, the exchange also deducts 1% TDS = ₹1,500, which you later adjust against that ₹15,600 liability. If instead you had sold at a ₹50,000 loss, you would owe no tax on it — but you could not use that loss to offset any other gain.
Crypto-to-crypto swaps and spending count
A taxable transfer is not only cashing out to rupees. Swapping one coin for another (BTC to ETH, or any coin to a stablecoin like USDT) is a taxable event, and so is paying for goods or services in crypto. In each case the gain is measured in rupee terms at the time of the transfer and taxed at 30%, and TDS may apply.
How to stay compliant
Keep a clear record of every buy, sell, swap and transfer with dates and rupee values; most Indian exchanges provide a tax/transaction report. Crypto income is reported under the Schedule VDA in your income-tax return, and you should reconcile the TDS already deducted against your Form 26AS and AIS. Because the rules are strict and still evolving, it is worth having a chartered accountant review your position — especially if you trade actively, earn staking rewards, or use foreign platforms.
Not tax advice
Token Times is a crypto data and news publisher, not a tax adviser. This guide explains the broad, widely-reported rules as general information; it is not personalised tax advice, and tax law changes. Always verify the current position against the Income Tax Department of India and a qualified chartered accountant before you act.
Frequently asked questions
How much tax do I pay on crypto profits in India?
A flat 30% on your gains, plus any surcharge and a 4% health & education cess, under Section 115BBH — regardless of which income-tax slab you fall in. The only amount you can deduct is the cost of acquisition (what you paid for the coin); you cannot deduct exchange fees, interest or other expenses.
What is the 1% TDS on crypto?
Under Section 194S, 1% is deducted at source on crypto transfers above ₹10,000 (₹50,000 a year for specified individuals), in force since 1 July 2022. It is usually withheld by the Indian exchange. It is not an extra tax — it is adjusted against your final tax liability — but it does lock up cash and creates a reporting trail.
Can I set off crypto losses against gains?
No. A loss on one VDA cannot be set off against a gain on another VDA, cannot be set off against any other income, and cannot be carried forward to future years. Each taxable gain is taxed at 30% on its own.
Do I owe tax if I only hold crypto?
No. Tax is triggered when you sell, swap or spend crypto — simply holding it is not taxed. Note that a crypto-to-crypto swap (for example BTC to ETH) does count as a taxable transfer, and TDS can still apply on transfers even when overall you are at a loss.
Is crypto legal in India?
Yes — it is legal to buy, hold and trade crypto in India. It is not legal tender, it is taxed as a Virtual Digital Asset, and regulation (RBI and SEBI) continues to evolve. Legality is not the same as being low-risk; crypto remains volatile and speculative.
Are gifts, airdrops and staking rewards taxed?
Generally yes. Crypto received as a gift or airdrop is typically taxable in the recipient’s hands at its market value, and rewards from staking or similar activity are taxable as income. The treatment is nuanced and situation-specific — check with a chartered accountant.