India cryptocurrency tax guide

What this guide covers

This guide covers how India taxes cryptocurrency for the FY 2025-26 financial year. India calls crypto and similar assets "Virtual Digital Assets," or VDAs. The rules come from Section 115BBH and Section 194S of the Income-tax Act, 1961. Parliament added these sections through the Finance Act 2022, effective April 1, 2023. We read the Income Tax Department's own published text of Section 115BBH and the VDA definition (Section 2(47A)) directly for this guide. This is educational information, not individualized tax advice.

Tax treatment of cryptocurrency

India taxes crypto gains at a flat 30% rate, no matter how long you held the asset. India created a dedicated category for this: Virtual Digital Assets, or VDAs, taxed under Section 115BBH. Most property in India falls under capital gains or business-income rules instead — crypto doesn't. The 30% rate stays the same regardless of your holding period, your income bracket, or whether you're investing or actively trading. Most other countries in this knowledge base vary their rate by one of those factors; India deliberately doesn't.

Common taxable events

• Selling VDAs for Indian rupees — taxed at the flat 30% rate under Section 115BBH.
• Swapping one VDA for another — this counts as selling the VDA you gave up. You owe 30% tax on any gain from that swap.
• Spending VDAs on goods or services — reported as a taxable transfer.
• Receiving VDAs as payment, salary, or a large gift — taxed as regular income at your normal slab rate when you receive it, not at the flat 30% VDA rate. The 30% rate only applies when you later sell or transfer what you received.
• Mining, staking, and airdrop income — taxed at your normal income slab rate when you receive it. If you later sell those tokens, that sale is taxed separately at the 30% VDA rate.

Potentially non-taxable events

• Buying and holding VDAs without transferring them is not itself taxed under Section 115BBH.
• We did not find clear statutory guidance on whether moving crypto between your own wallets is tax-free. Don't assume it's exempt — confirm this with a tax professional. India's VDA transfer rules are narrower than the general property rules many other countries use, so an assumption that holds elsewhere may not hold here.

Tax rates and thresholds

The flat 30% rate applies on top of your other income tax, not blended into it. We confirmed this directly from the statutory text. Here's how it works: you pay 30% tax on your VDA gains. Separately, you pay regular income tax on everything else, calculated as if the VDA gains didn't exist. The two amounts don't mix. On top of that 30%, a 4% health and education cess applies — this is standard across all Indian income tax, not specific to crypto. Together, that brings your baseline effective rate to about 31.2%, before any surcharge. Higher-income taxpayers may owe an additional income-based surcharge; we don't reproduce the full surcharge table here. There's also a separate 1% TDS (tax deducted at source) under Section 194S, which applies when your VDA transfers cross a threshold. We did not independently re-confirm the exact current threshold against the Department's own text in this pass. Secondary sources report figures somewhere between ₹10,000 and ₹50,000 per year, depending on who's paying. Confirm the precise number directly with the Income Tax Department before relying on it.

Cost basis and calculation

You can only deduct what you originally paid for the VDA — nothing else. We confirmed this directly from Section 115BBH's own text. Transaction fees, gas fees, and exchange fees are explicitly not deductible. This is unusually strict compared to most other countries in this knowledge base. It gets stricter: if you lose money on a VDA transfer, you can't use that loss to offset gains elsewhere in your taxes, under any provision of the Income-tax Act. You also can't carry the loss forward to a future year. In practice, each VDA gain is taxed on its own. A loss on one trade gives you no tax benefit anywhere else.

Reporting and compliance

• Report VDA gains in a dedicated "Schedule VDA" section of your income tax return. Use ITR-2 if you're an investor with no business income, or ITR-3 if your VDA activity counts as business or trading income. This has been mandatory since FY 2025-26.
• If you trade through an Indian exchange, the exchange generally handles the 1% TDS deduction automatically. If you use a foreign exchange, you're responsible for deducting and remitting that TDS yourself.
• We did not independently verify two reported claims: that exchanges must share data with the tax department starting from a specific date, and how GST applies to exchange service fees. Treat both as unverified until you confirm them against official sources.

Residency and cross-border issues

Your Indian tax residency status generally determines whether your worldwide VDA gains fall under this regime. Using a foreign exchange doesn't change that — if you're a resident taxpayer, your gains are still covered, no matter where you traded. This guide doesn't cover non-resident-specific VDA rules or how tax treaties interact with this regime in depth.

Example

This example is hypothetical, for illustration only. Priya buys a token for ₹50,000 and sells it eight months later for ₹90,000 — a ₹40,000 gain. India's flat rate applies no matter how long she held it, so the calculation would be the same if she'd held it eight years instead. She owes 30% tax on the gain: ₹12,000. Add the 4% cess on that tax amount: ₹480. Her baseline tax is ₹12,480, before any surcharge. Now say Priya also lost ₹40,000 on a different VDA trade the same year. That loss can't reduce the ₹12,480 she owes — VDA losses don't offset VDA gains under this regime.

Official resources

• Income Tax Department (CBDT): https://www.incometax.gov.in/

Limitations and review information

Tax year covered: FY 2025-26. Last verified: October 10, 2026, against the Income Tax Department's own published text of Section 115BBH and Section 2(47A) (incometaxindia.gov.in). Two things remain unconfirmed: the exact current Section 194S TDS threshold, and claims about exchange data-sharing requirements or GST on exchange fees. Treat both as unverified until you check them directly. One more open item: the Income-tax Act, 2025 is reported to take effect April 1, 2026 and to keep the VDA provisions in place, but we did not independently confirm that. This is educational information only, not individualized tax advice. Consult the Income Tax Department's own site or a qualified Indian tax professional for your specific situation.