Crypto tax in India: the flat rate, no loss set-off, TDS and what to report

The law calls crypto a virtual digital asset (VDA). The tax is on the income from the transfer of one. A sale for rupees is a transfer, and so is an exchange of one VDA for another. The flat rate applies from 1 Apr 2022 and covers the income whether it is shown as a capital gain or as business income.

The Finance Minister told the Rajya Sabha in January 2018 that bitcoins will not be considered lawful or legal tender in India. Crypto is not legal tender. In February 2026 the Minister of State for Finance told the Lok Sabha that virtual digital assets, including cryptocurrencies and NFTs, are currently not regulated, and that crypto transactions must be disclosed. Service providers must register with FIU-IND. The tax rules say how a transfer is taxed. They are not a statement of what is permitted.

So the gain on a transfer is what you received minus what it cost you, and the tax is 30% of that gain, plus 4% cess on the tax. The row for this rule in our data began on 1 Apr 2022.

A loss on a transfer cannot be set off against any other income, and it cannot be carried forward to a later year. That includes the gains on other transfers: our engine works each transfer out on its own and taxes only the ones that made a gain, which is also how the return lists them, one row per transfer.

In practice, a sale at a loss neither adds to the tax nor takes anything off it. See the worked example below, where a loss sits next to two gains.

• Swapping one coin for another is an exchange, which is a transfer, so the gain on what you gave up is taxed even though no rupees changed hands. How the value of the swap is fixed is not confirmed (see the end of this guide).
• Receiving a gift. A VDA received as a gift is the receiver's income when its value, with other gifts in the year, is more than ₹50,000, unless it comes from a relative, on marriage or by inheritance. The whole amount is then taxed at slab rates. The person who gives a genuine gift has no income from it.
• Receiving crypto as pay or for work is income when received. We have not sourced the rules for that case, so this guide and the calculator do not cover it.

When you sell, the payer deducts 1% of the sale value as tax at source once the year's payments pass ₹50,000 for a specified person or ₹10,000 for anyone else. It is a credit against the tax above, not an extra tax. The full story is in the TDS guide.

Three made-up sales in one financial year, worked out by the same engine as the crypto tax calculator, with TDS counted for a specified person who sold through one platform.

How the tax is built up

Because the loss on sale 2 is not set off, the tax is on ₹1,00,000, not on ₹60,000. Put your own numbers into the crypto tax calculator.

Open the crypto tax calculator

• VDA income is reported in a separate schedule of the return, Schedule VDA, with one row per transfer: date of acquisition, date of transfer, cost of acquisition and consideration received. The portal works out the income from them.
• ITR-2 is used when the income is shown as capital gains and ITR-3 when it is business income; ITR-1 and ITR-4 cannot be used for VDA income.
• A loss row shows nil income, because a VDA loss is neither set off nor carried forward.
• TDS deducted under s.194S is claimed as a credit when the return is filed; check the figures against Form 26AS and the Annual Information Statement before filing.
• Exchanges and other prescribed reporting entities report crypto-asset transactions to the department (1961 Act s.285BAA from the Finance Act 2025; Income-tax Act 2025 s.509), and the Finance Act 2026 penalises a reporting entity that files late or inaccurately (s.446). The duty is on those entities, not on an individual.

Records that make the schedule easy to fill: the date and cost of each acquisition, the date and value of each transfer, and your platform's statements.

The Income-tax Act, 2025 replaces the 1961 Act for tax years starting 1 April 2026. Returns for earlier years still use the old numbers. The rules in this guide carry over; the numbers moved.

• Netting a loss against a gain on another sale, or against salary or share gains. The law does not allow it, so the tax comes out too low.
• Deducting platform fees, network fees or interest. Only the cost of acquisition is deducted.
• Leaving out swaps because no rupees were received. An exchange is a transfer.
• Expecting a lower rate for holding longer. There is none.
• Treating the TDS as the whole tax. It is a credit: the tax on your total gains can be more or less than what was deducted.
• Not checking the TDS in your Form 26AS and the Annual Information Statement against your own records before filing.

The Income Tax Department's site and the Gazette returned an error to our reader, so the sources above are the Act's text as mirrored on a statute site and commentary. These points need a chartered accountant to confirm for your case:

• Not yet verified: that the Act requires the gain to be computed per transfer rather than per asset.
• Not yet verified: how the value of a swap is to be fixed; RupeeScope takes the sale value you type.
• Not yet verified: surcharge treatment, not read from a primary source in this session.
• Not yet verified against a primary source: the Income Tax Department and indiacode pages returned 403 to our fetcher, so the 30% rate, the cost-only rule and the loss rule were read from the 2025 Act text mirrored on eztax.in and from Taxmann commentary on s.115BBH (second source); the 4% cess is the figure in the slab rows of this file.
• Not yet verified: the exact sub-section of the 2025 Act holding these thresholds (TaxTMI cites s.393(4), Sl. No. 12); the s.393(1) table we read shows a nil threshold and the limits elsewhere in the section.
• Not yet verified: how an in-kind deduction reaches your Form 26AS.
• Not yet verified: the section behind the 20% rate (206AA in the 1961 Act) and whether a higher rate also applies to non-filers (206AB / the 2025 Act equivalent); neither is modelled.
• Not yet verified: whether TDS applies from the first payment that takes the year's total past the threshold or on the whole year's total; RupeeScope deducts 1% from the payment that crosses the threshold onwards and not before, and says so in its assumptions.
• Not yet verified: that a VDA is within the property covered by s.56(2)(x), and the 2025 Act section number s.92(2)(m): both come from commentary (TaxScan, KoinX) and not from the statute text. The cost of a gifted VDA in the recipient's hands is not modelled.
• Not yet verified: the Schedule VDA fields and the choice of form come from KoinX and not from the ITR form instructions; the s.509 mapping and the s.446 penalty come from the Finance Bill 2026 coverage on TaxGuru and ITAT Online and the enacted text was not read; the Gazette and incometaxindia.gov.in were blocked to our fetcher.