India's Crypto Tax Framework

Since April 2022, India has implemented a clear (if strict) tax framework for cryptocurrency under the Finance Act. Every crypto trader operating in India must understand these rules to stay compliant and avoid penalties.

The 30% Flat Tax

All income from the transfer of Virtual Digital Assets (VDAs) — which includes all cryptocurrencies and NFTs — is taxed at a flat rate of 30% under Section 115BBH of the Income Tax Act. This applies regardless of your income tax slab. Whether you earn ₹10,000 or ₹10,00,000 from crypto, the tax rate is 30%.

Additionally, a 4% health and education cess applies on top, making the effective rate approximately 31.2%.

1% TDS (Tax Deducted at Source)

Under Section 194S, a 1% TDS is deducted on all crypto transactions above ₹10,000 per year (₹50,000 for specified persons). Indian exchanges automatically deduct this TDS when you sell. You can claim this TDS credit when filing your Income Tax Return.

No Loss Set-Off

This is the harshest provision: losses from one cryptocurrency cannot be set off against gains from another cryptocurrency. If you lose ₹1,00,000 on Ethereum but gain ₹1,50,000 on Bitcoin, you pay 30% tax on the full ₹1,50,000 Bitcoin gain. The Ethereum loss provides zero tax benefit. Additionally, crypto losses cannot be carried forward to future years.

What Counts as a Taxable Event?

Selling crypto for INR. Swapping one crypto for another (e.g., BTC to ETH). Using crypto to buy goods or services. Earning crypto through mining, staking, or airdrops (taxed as income at your slab rate upon receipt, then 30% on any subsequent gains).

Record Keeping

Maintain detailed records of every trade — date, asset, quantity, purchase price, sale price, and platform. Indian exchanges provide annual tax reports, but if you use multiple platforms or DeFi protocols, you need to track manually. Consider using crypto tax calculation software popular in India.

Consult a Professional

Tax laws evolve. The above reflects the framework as of 2026. Always consult a qualified Chartered Accountant familiar with crypto taxation for personalized guidance. Do not rely solely on this article for tax decisions.

Disclaimer: This is educational information, not tax advice. cRyPtO sMaRt is not a tax advisory service. Consult a qualified CA for your specific situation.