Crypto and VDA tax in India
How income from cryptocurrency, NFTs and other virtual digital assets is taxed: the flat 30% rate, the bar on setting off losses, the 1% TDS, gifts, advance tax and the return form, under the 1961 Act for FY 2025-26 and the Income-tax Act, 2025 from Tax Year 2026-27.
Published by SKAG and Associates · Page maintained by CA Gaurav Singh (ICAI M.No. 539050) · Last updated: 30 October 2026
Note: General information on income tax as at 30 October 2026. It does not cover whether any particular asset or platform is lawful to use. This is not a substitute for professional advice.
Since 1 April 2022 the income-tax law has a separate scheme for virtual digital assets (VDAs), a term that covers cryptocurrencies, non-fungible tokens and similar digital tokens, but not the rupee or a foreign currency. The scheme continues under the Income-tax Act, 2025 from Tax Year 2026-27. The rules below apply whether the asset is held for a few hours or several years.
The tax on gains
| Point | FY 2025-26 (1961 Act) | Tax Year 2026-27 (2025 Act) |
|---|---|---|
| Rate | 30%, Section 115BBH | 30%, Section 194 (Table Sl. No. 4) |
| Deduction | Cost of acquisition only | |
| Losses | Not set off against any income, including other VDA gains, and not carried forward | |
| TDS on transfer | 1%, Section 194S | 1%, Section 393(1) (Table Sl. No. 8(vi)) |
| TDS without a valid PAN | 20% | |
Surcharge and 4% cess are added to the 30%. The basic exemption limit cannot reduce VDA income, and in the new regime the Section 87A rebate (Section 156 of the 2025 Act) is limited to tax at slab rates, so it does not reduce the tax on VDA gains. The VDA tax calculator works out the tax and the TDS credit transfer by transfer.
A worked example
In Tax Year 2026-27 a salaried person in Delhi sells Coin A for Rs 3,00,000 that cost Rs 1,80,000, and Coin B for Rs 60,000 that cost Rs 1,00,000. The gain on Coin A is Rs 1,20,000. The loss of Rs 40,000 on Coin B cannot be set off, so tax is worked on Rs 1,20,000: 30% is Rs 36,000, plus 4% cess of Rs 1,440, a total of Rs 37,440 before any surcharge. If the exchange deducted 1% TDS on both sales (Rs 3,600), that is credited, and the balance is payable as advance tax or self-assessment tax.
TDS on transfers
The exchange, or the buyer in a direct deal, deducts 1% of the consideration when it exceeds Rs 10,000 in the year, or Rs 50,000 where the payer is a specified person (an individual or HUF with no business or professional income, or whose sales, turnover or gross receipts in the preceding year did not exceed Rs 1 crore from a business or Rs 50 lakh from a profession). The TDS appears in the AIS and Form 26AS and is claimed in the return. Where the exchange deducts the tax, the seller does not need to do anything further at the time of sale; peer-to-peer buyers have to deduct and deposit it themselves.
Gifts, airdrops and other receipts
A virtual digital asset is treated as property for the gift rule: if VDAs worth more than Rs 50,000 are received in a year without consideration from people who are not relatives, the whole value is taxable as income from other sources, and the cost on a later sale is that value. Receipts from mining, staking and airdrops raise questions on which the law is less settled, including when the income arises and at what value. The answer depends on the facts of each case, so settle it before filing the return.
Advance tax and the return
VDA gains count towards advance tax. Where the tax for the year after TDS is Rs 10,000 or more, it is paid in the four instalments (15 June, 15 September, 15 December and 15 March); where the gains are reported as capital gains, those that arise after an instalment date can be covered in the remaining instalments without interest for deferment on that part. The advance tax guide has the dates and the interest rules. In the return, each transfer is reported in Schedule VDA with the dates of acquisition and transfer, the cost and the consideration, in ITR-2 (capital gains) or ITR-3 (business income). The ITR form selector helps choose between them.
Records to keep
- Exchange statements for the year, with each buy, sell and swap, and the TDS deducted.
- Bank statements showing deposits to and withdrawals from the exchange.
- Wallet addresses and transaction records for transfers between wallets.
- Proof of cost for assets received as gifts or brought in from another platform.
Frequently Asked Questions
What rate of tax applies to crypto gains in Tax Year 2026-27?
A flat 30% plus surcharge and 4% cess on the income from transferring a virtual digital asset, whatever your slab rate. For FY 2025-26 the provision is Section 115BBH of the Income-tax Act, 1961; from Tax Year 2026-27 it is Section 194 (Table Sl. No. 4) of the Income-tax Act, 2025.
Can a loss on one coin reduce the tax on another?
No. A loss on the transfer of a virtual digital asset cannot be set off against the gain on another virtual digital asset or against any other income, and it cannot be carried forward.
Which ITR form reports crypto income?
ITR-2 where the income is reported as capital gains, or ITR-3 where it is business income, in Schedule VDA. ITR-1 and ITR-4 cannot be used by a person with income from virtual digital assets.
Is crypto received as a gift taxable?
A virtual digital asset counts as property for the gift rule. If its value received without consideration from persons other than relatives exceeds Rs 50,000 in a year, the whole value is taxable as income from other sources (Section 56(2)(x) of the 1961 Act; from Tax Year 2026-27, Section 92(2)(m) of the Income-tax Act, 2025, which lists virtual digital assets as property in Section 92(5)(f)).
Do I need to pay advance tax on crypto gains?
Yes, if the total tax for the year after TDS is Rs 10,000 or more. The 1% TDS is credited against the tax, and the balance is paid in the advance tax instalments. Capital gains that arise after an instalment date can be covered by paying in the remaining instalments.