Crypto Tax in India: How Much You Pay (30% + 1% TDS, 2026)
A clear, India-focused guide to how crypto profits are taxed: the flat 30% under Section 115BBH, the 1% TDS, no loss set-off, and worked ₹ examples.
If you buy, sell, or trade crypto in India, two rules decide what you owe: profits on Virtual Digital Assets (VDAs) are taxed at a flat 30% under Section 115BBH of the Income Tax Act, and a 1% TDS is deducted on transfers under Section 194S. There is no "small profit" exemption, no long-term discount, and, importantly, crypto losses cannot be set off against anything. This guide explains exactly how it works, with worked rupee examples.
Crypto tax in India is deliberately harsh compared with equities or mutual funds. Knowing the mechanics before you trade helps you avoid nasty surprises at filing time. As always, treat this as an educational overview and confirm current figures with a qualified CA or the Income Tax Department, because rules can and do change.
Key takeaways
- Crypto gains are taxed at a flat 30% (plus applicable cess/surcharge) under Section 115BBH, in force since 1 April 2022.
- The only deduction allowed is your cost of acquisition, so exchange fees, internet, or infrastructure costs cannot be claimed.
- Losses cannot be set off against other income or against gains on other coins, and cannot be carried forward.
- There is no short-term vs long-term distinction, because holding period does not matter.
- A 1% TDS under Section 194S applies to transfers above ₹10,000 in a year (₹50,000 for specified persons), deducted since 1 July 2022. It is not an extra tax; it is adjusted against your final liability.
The flat 30% tax under Section 115BBH
Every rupee of profit you make from selling a VDA is taxed at 30%, regardless of your income slab. A person in the 5% slab and a person in the 30% slab pay the same 30% rate on their crypto gains. On top of the 30%, you pay the applicable 4% health and education cess, and a surcharge if your total income crosses the surcharge thresholds.
The rule that catches most people is the deduction rule. When computing the gain, you may subtract only the cost of acquisition, meaning what you paid to buy the coin. You cannot deduct:
- Exchange trading fees or brokerage
- Gas or network fees
- Software, hardware, or electricity costs (relevant to miners)
- Interest on money borrowed to invest
Because there is no holding-period benefit, selling after two days and selling after two years attract the same 30%. This is very different from stocks, where long-term capital gains get concessional treatment.
No loss set-off: the rule that surprises everyone
This is the single most important thing to internalise. Under Section 115BBH:
- A crypto loss cannot be set off against salary, business income, rent, interest, or capital gains from shares.
- A loss on one coin cannot offset a gain on another coin. If you make ₹40,000 on Bitcoin and lose ₹40,000 on another token, you still pay 30% tax on the ₹40,000 Bitcoin gain. Your net economic profit may be zero, but your tax is not.
- Losses cannot be carried forward to future years.
Active traders feel this most sharply, because in normal markets winners and losers cancel out, but not for tax. If you are weighing how hands-on to be, our guide to crypto trading vs investing explains why frequent trading multiplies both fees and this tax friction.
A worked example: how the 30% is applied
Suppose Riya, a salaried professional in Pune, makes three crypto trades in a financial year. Here is how each is taxed independently.
| Trade | Buy cost (₹) | Sell value (₹) | Gain/Loss (₹) | Taxable? | Tax @30% (₹) |
|---|---|---|---|---|---|
| Bitcoin (BTC) | 1,00,000 | 1,50,000 | +50,000 | Yes | 15,000 |
| Ethereum (ETH) | 80,000 | 60,000 | −20,000 | Loss (ignored) | 0 |
| Solana (SOL) | 40,000 | 70,000 | +30,000 | Yes | 9,000 |
Riya's real economic profit is ₹50,000 − ₹20,000 + ₹30,000 = ₹60,000. But because the ₹20,000 ETH loss cannot be set off, she is taxed on the two gains totalling ₹80,000. Her base tax is 30% × ₹80,000 = ₹24,000, plus 4% cess (₹960), giving ₹24,960. She pays tax on ₹80,000 even though she actually earned ₹60,000. You can track how coins like Bitcoin and Solana are moving on our live markets page before you plan any exit.
The 1% TDS under Section 194S
Separate from the 30% tax, a 1% TDS is deducted on the transfer of a VDA under Section 194S, effective 1 July 2022. Key points:
- It applies when your VDA transactions in a year exceed ₹10,000 (the threshold is ₹50,000 for "specified persons", broadly individuals/HUFs without significant business turnover).
- On Indian exchanges registered with FIU-IND, the exchange usually deducts the 1% for you and deposits it with the government.
- TDS is not an additional tax. It is a prepayment credited against your final tax bill; if too much is deducted, you claim it back as a refund when you file.
Because TDS is charged on the transfer value (not just profit), high-frequency traders can see a meaningful chunk of capital tied up until refund. For a plain-English breakdown, read what the 1% TDS on crypto actually means.
Putting it together at filing time
When you file your return, you report your crypto gains under the VDA schedule, apply the flat 30%, and claim credit for the 1% TDS already deducted. You do not average gains and losses; each gain is taxed, each loss is dropped. For the actual step-by-step, see our ITR walkthrough for crypto, and to get the numbers right first, follow how to calculate crypto gains for tax.
None of this makes crypto illegal. It is legal to hold and trade, just heavily taxed. If you are unsure about the legal side, our explainer on whether cryptocurrency is legal in India lays out the 2026 status clearly.
Frequently asked questions
Do I pay 30% even if my income is below the taxable limit?
Yes. The flat 30% under Section 115BBH applies to VDA gains regardless of your slab, so even someone otherwise below the basic exemption limit pays 30% on crypto profits. Confirm your specific situation with a CA.
Can I deduct exchange fees from my crypto profit?
No. The only deduction permitted is the cost of acquisition (the purchase price). Trading fees, gas fees, and other costs cannot be subtracted from the taxable gain.
If I lost money overall, do I still owe tax?
Possibly. Because losses cannot offset gains on other coins, you may owe 30% on your winning trades even if your portfolio is down overall. Each gain is taxed on its own.
Is the 1% TDS in addition to the 30% tax?
No. The 1% TDS is a prepayment adjusted against your final tax liability. If more was deducted than you owe, you claim the balance back as a refund when filing.
Crypto tax in India is strict but predictable once you understand it. Before you plan an entry or exit, check current prices on our live markets and see where our models point next on the AI forecasts page, and always confirm the latest tax rules with a qualified CA or the Income Tax Department.
This article is AI-assisted, educational and general in nature. It is not financial advice and never a guarantee of profit. Every trade is at your own risk on your own exchange. See our risk disclosure and editorial policy.
