Crypto Tax in India: The Ultimate Guide for 2026

This guide covers Indian tax law under the Income-tax Act and CBDT rules. It is not tax advice. Confirm your position with a Chartered Accountant.

Income from the transfer of Virtual Digital Assets is taxed at a flat 30%. Other than the cost of acquisition, no deduction is permitted. On top of the 30%, you pay a 4% health and education cess, bringing the rate to 31.2%, plus any surcharge that applies at your income level.

VDA losses cannot be set off against any income, and such losses cannot be carried forward. These rules apply whether you treat VDAs as investments or trading inventory.

If you receive crypto through activities like mining, staking, or as payment, that receipt may be taxed under the regular provisions for business or other income. When those tokens are later transferred, the 30% VDA rate applies to the transfer, with cost-of-acquisition rules such as "nil" cost for self-generated coins where applicable. For transfers through March 31, 2026, the rate is set under Section 115BBH of the Income-tax Act, 1961. For transfers from April 1, 2026, the provision is Section 194 (Table, Sl. No. 4) of the Income-tax Act, 2025. Maintain clear records so each later transfer can be reported correctly.

A 1% TDS generally applies to consideration paid for the transfer of a VDA. On Indian crypto exchange trades, the exchange or broker typically facilitates deduction and deposit. In peer-to-peer transactions, the buyer may be responsible for deducting and depositing TDS.

TDS applies once annual consideration thresholds are crossed. Broadly, the threshold is ₹50,000 in a financial year for specified persons and ₹10,000 for others. TDS is a credit against your final tax, so you still compute the 30% tax on VDA transfer income when filing your return.

The TDS rule sat in Section 194S of the 1961 Act through March 31, 2026. From April 1, 2026, it sits in Section 393(1), Table Sl. No. 8(vi), of the Income-tax Act, 2025. The 1% rate and the thresholds carried over unchanged.

Disclose VDA transfers in Schedule VDA of your ITR. You will enter the acquisition date, transfer date, consideration, cost of acquisition, and resulting income under the special regime. Make sure any TDS credits on VDA transfers appear in your tax credit statements and are claimed in your return.

Do not net VDA profits and losses to reduce income. The law does not allow set-off of losses from one VDA against income from another VDA or other sources. Keep exchange CSVs, on-chain proofs, and INR valuations to support your entries.

Here's a breakdown of how to file your crypto taxes in India on the Income Tax e-Filing portal. Check official sources for further guidance, as steps and regulations may change year over year.

Step 1: Log in to the e-Filing Portal

Access your account linked to your PAN and verify your profile, bank details, and contact information.

Step 2: Start a new ITR filing

Select the relevant assessment year (called the tax year for income earned from April 1, 2026) and choose online or offline filing as applicable.

Step 3: Select the correct ITR form

Choose the ITR that matches your income profile. Most salaried filers with VDA activity use ITR-2. Those with business or professional income typically use ITR-3. Confirm that Schedule VDA is available in the form you select.

Step 4: Choose filing type and reason

Pick "Original," "Revised," "Belated," or "Updated" as appropriate for your situation.

Step 5: Fill in personal and income details

Complete personal information, residential status, and all applicable income heads and deductions unrelated to VDA.

Step 6: Declare crypto transactions (Schedule VDA)

Enter each transfer with dates, consideration, cost of acquisition, and computed income. Match any 1% TDS credits and claim them in the return.

Step 7: Declare other related income (optional)

Report interest, salary, rental income, and other items under the correct schedules.

Step 8: Avoid using Capital Gains Schedule (CG) for crypto

Use Schedule VDA for VDA transfers. Do not report them under the standard capital gains schedule.

Step 9: Preview tax computation

Validate the return, review your total crypto tax and credits, and complete e-verification through an approved method.

India's financial year runs from April 1 to March 31. The Income-tax Act, 2025 calls it the tax year. Salaried and investment-income filers using ITR-1 or ITR-2 must file by July 31 after the year ends. Filers with business or professional income who aren't subject to audit, usually on ITR-3 or ITR-4, have until August 31. Audit cases have a later date.

For FY 2025-26, belated returns can be filed until December 31, 2026, and revised returns until March 31, 2027. Updated returns (ITR-U) can be filed up to four years after the end of the assessment year. Deadlines can be extended by CBDT notification, so confirm the notified date before filing.

Budget 2026-27, presented February 1, 2026, kept the 30% tax on VDA transfer income and the 1% TDS unchanged. It added penalties for crypto platforms and other reporting entities that fail to file crypto transaction statements under Section 509 of the Income-tax Act, 2025. The penalties are ₹200 per day for not filing and ₹50,000 for inaccurate information that isn't corrected. The Finance Act, 2026 received assent on March 30, 2026, and the penalties apply from April 1, 2026.

The Income-tax Act, 2025 replaced the 1961 Act on April 1, 2026. It keeps the VDA rules but renumbers them. Transfers made through March 31, 2026 are reported under the old sections in your AY 2026-27 return.

Get help with your crypto taxes

Tracking 30% VDA income, 1% TDS credits, and acquisition costs across several exchanges and wallets requires careful record-keeping. TokenTax brings your exchange and wallet history into one place, so you can see every transfer you need for Schedule VDA. If your situation involves multiple platforms, peer-to-peer trades, or activity across multiple countries, our crypto tax experts can review it with you.

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