India Crypto Tax Guide 2026

India introduced a comprehensive crypto tax regime in the Union Budget 2022-23, effective April 1, 2022. Cryptocurrencies are classified as Virtual Digital Assets (VDA) under Section 2(47A) of the Income Tax Act. A flat 30% tax (plus 4% health and education cess, totaling 31.2%) applies to gains from the transfer of VDAs. Additionally, a 1% Tax Deducted at Source (TDS) under Section 194S applies on all crypto transactions exceeding ₹10,000 per year (₹50,000 for specified persons). India's crypto tax regime is notably strict, with no loss offsetting and no deductions except the cost of acquisition.

All gains from the transfer (sale, trade, swap, or exchange) of Virtual Digital Assets are taxed at a flat 30% under Section 115BBH, plus 4% cess (effective rate: 31.2%). This rate applies regardless of your income level, holding period, or the nature of the VDA. There is no distinction between short-term and long-term gains. No deductions or exemptions are available other than the cost of acquisition — you cannot deduct transaction fees, gas fees, or any other expenses. The flat rate applies to all taxpayers including individuals, HUFs, firms, and companies.

One of the strictest aspects of India's crypto tax regime is the prohibition on loss offsetting. Losses from the transfer of one VDA cannot be offset against gains from another VDA. For example, if you make ₹5 lakh profit on Bitcoin but ₹3 lakh loss on Ethereum, you pay 30% tax on ₹5 lakh — the Ethereum loss provides no tax benefit. Losses also cannot be offset against any other income (salary, business, capital gains from stocks, etc.) and cannot be carried forward to future years. This makes strategic selling to minimize losses ineffective for tax purposes.

A 1% Tax Deducted at Source (TDS) applies to all VDA transfers exceeding ₹10,000 per year (₹50,000 for specified persons such as those subject to tax audit). Indian exchanges automatically deduct 1% TDS from each transaction. For peer-to-peer trades and foreign exchanges, the buyer is responsible for deducting and remitting TDS. TDS is not an additional tax — it is a prepayment that is credited against your final tax liability. However, it reduces your available capital for trading and creates compliance obligations.

Staking rewards and mining income are taxable at 30% when received, based on their INR fair market value. Gifts of VDAs exceeding ₹50,000 in a year are taxable in the hands of the recipient under Section 56(2)(x). VDAs received as gifts have zero cost of acquisition for the recipient, meaning the entire value is taxable at 30% upon disposal. Airdrops may be treated as gifts if received without consideration. NFT transactions follow the same 30% flat tax regime.

Taxxy tracks all VDA transactions and calculates the 30% flat tax per transfer as required by Indian law. The platform correctly applies the no-loss-offsetting rule, calculating tax on each profitable transaction individually. All values are converted to INR using historical exchange rates. Taxxy generates ITR-compatible gain calculations and tracks TDS already deducted by exchanges for credit against your final tax liability. The platform also flags transactions requiring self-assessment TDS payment.