Crypto Taxes in India: 30% Tax, 1% TDS, Loss Rules and ITR Filing

Crypto taxes in India are generally calculated transaction by transaction on income from transferring a virtual digital asset. The starting point is the sale or transfer value minus the permitted acquisition cost. Under the legacy Income-tax Act framework commonly referenced as section 115BBH, positive VDA income is taxed at 30%, plus applicable surcharge and 4% health and education cess. Expenses other than acquisition cost are generally not deductible, and a loss from one VDA transfer cannot ordinarily be set off against income from another VDA transfer or other income. For financial year 2026-27 onward, taxpayers should also check the corresponding provisions and forms under the Income-tax Act, 2025 and Income-tax Rules, 2026 because section numbering and portal workflows may differ. Calculate each disposal separately, reconcile exchange and wallet records, account for TDS credit, and then report the transaction in the applicable VDA schedule of the return.

Buying crypto with rupees and continuing to hold it does not by itself normally create transfer income. Tax generally becomes relevant when a taxable transfer or receipt occurs, such as selling crypto for rupees, swapping one token for another, spending crypto, gifting it in circumstances that create tax consequences, or receiving crypto through salary, professional services, staking, mining or an airdrop. Holding still creates an important record-keeping obligation. Preserve the date, quantity, rupee cost, exchange fee, bank payment proof and wallet address because these details may be needed years later to establish acquisition cost. Moving the same beneficially owned crypto between your own exchange account and self-custody wallet is usually different from selling it, but the trail should clearly prove that both addresses belong to you. Where ownership is unclear, a wallet movement may be mistaken for a disposal during reconciliation.

Yes, a crypto-to-crypto swap can be a taxable transfer even when no rupees enter your bank account. The crypto given up is treated as transferred, so its fair rupee value at the time of the swap must be identified and compared with its permitted acquisition cost. The token received becomes a new holding with its own acquisition date, quantity and supportable rupee cost. A common mistake is to report only cash withdrawals and ignore swaps executed on an exchange or decentralised platform. That can understate the number of disposals and break the cost trail for the new asset. Download trade-level data rather than relying only on a wallet balance. Record both legs, timestamp, token quantity, rupee valuation method, trading fee and transaction hash. Where the platform does not provide reliable INR values, use a consistent, documented valuation approach and obtain professional review for material transactions.

The VDA TDS mechanism requires tax deduction on qualifying consideration paid for transfer of a virtual digital asset, subject to applicable thresholds and procedural rules. Under the legacy law it is widely known as section 194S and generally operates at 1% of consideration, not 1% of profit. Exchanges may deduct and report it for platform trades, while peer-to-peer or off-exchange transactions can place compliance responsibility on the buyer or other payer. For events on or after 1 April 2026, official Income Tax Department guidance indicates that the Income-tax Act, 2025 framework and updated forms apply; taxpayers should verify the current section reference and challan-cum-statement procedure on the e-filing portal. TDS is a tax credit, not the final crypto tax. Match it with Form 26AS, AIS and certificates or statements, then claim only the credit that is correctly reflected and attributable to you.

Under the restrictive VDA tax framework, a loss from transfer of one virtual digital asset generally cannot be set off against income from another VDA transfer, salary, business income, capital gains or other income. It also is not generally available for carry-forward. This means a taxpayer can have an overall economic loss across a portfolio but still owe tax on profitable transfers. For example, a ₹1,00,000 gain on one token and a ₹1,40,000 loss on another do not automatically produce a nil taxable result; the positive transfer income may remain taxable while the loss is ignored for VDA set-off purposes. Transaction-wise computation is therefore essential. Do not net all exchange activity into one annual profit figure unless the tax rules and return utility expressly permit that presentation. Keep each disposal, acquisition cost and result separately so the Schedule VDA reporting can be supported.

The correct ITR form depends on the taxpayer's complete income profile and the nature of the crypto activity, not merely on owning crypto. Individuals and HUFs without business or professional income commonly use ITR-2 where the return form supports Schedule VDA. Taxpayers whose crypto activity is classified as business or professional activity, or who otherwise have business income, commonly need ITR-3. ITR-1 and ITR-4 are generally not designed for transaction-wise VDA reporting. The head of income also depends on facts such as frequency, organisation, intention, accounting treatment and surrounding activities. Do not choose a form solely because an exchange labels you an investor or trader. Check the notified return forms for the relevant assessment year, because forms and validations can change. When the activity includes mining, professional receipts, derivatives, foreign platforms or substantial systematic trading, expert form-selection review is sensible.

Staking rewards, mining receipts and airdrops may create tax at receipt and again on later transfer, depending on the facts and applicable rules. At receipt, the rupee fair market value may be taxable under the appropriate head, such as income from other sources or business/professional income. That supportable value can then become relevant to the acquisition cost when the token is later sold or swapped, although the precise treatment should be checked for the relevant assessment year and transaction type. The later transfer is separately reported in Schedule VDA. Keep the reward date, token quantity, wallet transaction hash, platform statement, INR valuation source and any lock-up or vesting terms. Zero-cost assumptions can create an incorrect result, while using an unsupported market value can also be challenged. Mining additionally involves questions about business classification and whether hardware, electricity or other expenses are deductible against receipt-stage income; those questions require fact-specific review.

A genuine transfer between wallets or exchange accounts beneficially owned by the same person is normally not a sale merely because the blockchain records an outgoing transaction. However, the records must establish continuity of ownership. Keep the sending address, receiving address, transaction hash, date, quantity, network fee and evidence that both accounts or wallets belong to you. Network fees and token movements can complicate quantity reconciliation, especially with wrapped tokens, bridges and chain migrations. A transfer to another person, a payment for goods or services, a gift, a bridge transaction involving disposal and receipt of different tokens, or a decentralised finance transaction may have different consequences. Do not label every wallet outflow as an internal transfer. Reconcile the corresponding inflow at the destination and document the purpose. If there is no matching destination record, the movement may require further investigation before filing.

Keep trade-level exchange statements, order history, deposits and withdrawals, wallet addresses, transaction hashes, bank statements, UPI or payment proofs, invoices for crypto received as consideration, TDS certificates or platform reports, AIS, Form 26AS and the final tax computation. For every disposal, identify acquisition date, transfer date, quantity, permitted acquisition cost, consideration in rupees, fees, TDS and income head. Preserve data from closed accounts and foreign platforms before access is lost. Screenshots alone are weaker than downloadable CSV or PDF statements, but screenshots can supplement missing records. Use a consistent timezone and valuation method when importing trades. Internal transfers should be matched so they are not counted as sales. Records should be retained with the filed return and tax-payment challans because the department may ask how the figures were derived. Complex users should create a reconciliation workbook linking each return entry to source evidence.

Professional help is useful when there are many trades, multiple exchanges or wallets, missing cost data, foreign platforms, decentralised finance, staking, mining, airdrops, gifts, peer-to-peer trades, business classification questions, TDS mismatches or prior-year omissions. It is also valuable where AIS or Form 26AS does not match platform statements, the taxpayer used several PAN-linked accounts, or a notice has already been received. A simple investor with a few well-documented sales may be able to self-file after transaction-wise computation. The risk increases when records cannot be reconciled or when the return form and income head are uncertain. WealthSure's assisted ITR filing can help organise records, identify transfer events, reconcile TDS, prepare Schedule VDA data and support the filing decision. The taxpayer remains responsible for complete disclosure, so provide all exchange, wallet, bank and receipt information rather than only transactions that produced cash withdrawals.