Tax on Crypto in India: Rates, 1% TDS, Loss Rules and ITR Reporting
Tax on crypto in India is not based only on the cash withdrawn to your bank. Selling, swapping, spending or otherwise transferring a virtual digital asset can create a tax calculation, while 1% TDS may apply separately to the transfer consideration. This guide explains the practical rules, records and filing steps Indian taxpayers should check.
Crypto tax becomes confusing because the exchange balance, bank withdrawal and taxable event are three different things. A person may make ten token swaps without withdrawing rupees, receive staking rewards in a self-custody wallet, move coins between personal wallets, and later see a TDS entry in AIS that does not match the annual profit shown by the exchange. Filing from a single profit figure can therefore produce an incomplete or misleading return.
The safer approach is to identify every disposal or receipt, classify it, assign the correct tax year, preserve the rupee valuation and match tax credits. Indian law uses the broader term virtual digital asset (VDA), which can cover crypto-assets, tokens and notified digital assets. The special tax regime focuses on income from transfer, while gifts, rewards, mining and business receipts may involve additional provisions depending on the facts.
This guide explains the current practical position as of 5 August 2026. The Income-tax Act, 1961 governed relevant events up to 31 March 2026, while the Income-tax Act, 2025 came into force on 1 April 2026 and uses the concept of a tax year for income earned from Tax Year 2026-27 onward. Because section numbers, forms and portal labels can change during transition, use the current e-Filing utility for the applicable year instead of copying an older return screen.
Quick Answer: How Tax on Crypto Works in India
Income from transferring a virtual digital asset is generally taxed at a special rate of 30%, plus applicable surcharge and 4% health and education cess. Only the cost of acquisition is ordinarily permitted in computing transfer income under the special rule; most other expenses and loss set-offs are restricted.
A separate 1% TDS mechanism can apply to the transfer consideration. TDS is not your final tax and is not calculated on profit. It is a credit that must be reconciled with AIS, Form 26AS, exchange records and the return.
Do not wait for a bank withdrawal to decide whether tax applies. Selling crypto for rupees, swapping one token for another, using crypto to pay for something or gifting/transferring it can have tax consequences. Keep transaction-level records and use the ITR form and Schedule VDA or corresponding current-year disclosure required by the official utility.
Key Takeaways
- Tax is linked to a taxable transfer, not merely to bank withdrawal.
- The headline VDA tax rate is 30% plus applicable surcharge and cess.
- 1% TDS is generally on transfer consideration, not on profit.
- Only cost of acquisition is ordinarily allowed under the special transfer-income computation.
- VDA transfer losses cannot generally be set off or carried forward.
- Crypto-to-crypto swaps need INR valuation and cost-basis records.
- From 1 April 2026, use the Income-tax Act, 2025 terminology, forms and challans applicable to Tax Year 2026-27 onward.
What This Page Covers
- How the 30% special rate, surcharge and cess apply to VDA transfer income.
- Why 1% TDS and final crypto tax are separate calculations.
- How selling, swapping, staking, mining, gifting and self-wallet transfers differ.
- What changed with the Income-tax Act, 2025 from 1 April 2026.
- How to reconstruct cost basis and reconcile exchange, wallet, AIS and Form 26AS data.
- How to choose the correct ITR route and prepare Schedule VDA or the current equivalent disclosure.
- When assisted filing can reduce risk in a complex crypto return.
Basis of This Crypto Tax Guide
This article is based on practical transaction-record, taxation and return-filing workflows for Indian crypto users. The primary legal and procedural references are the official Income Tax Department material on VDA transfer income, the official VDA TDS guidance, the ITR-2 Schedule VDA instructions, and the Department's Income-tax Act, 2025 transition guidance.
Tax rules, portal screens, challans and return utilities may change. Apply the rules for the transaction date and relevant year, verify the latest official utility, and document any interpretation used for unusual receipts or missing records.
The 30% Crypto Tax Rate: What Is Actually Taxed?
The special rate applies to income from the transfer of a VDA, not to the full sale proceeds and not to the market value of crypto you continue to hold. A basic transfer calculation starts with the rupee value of consideration and subtracts the permitted cost of acquisition for the asset transferred.
| Item | Typical treatment | Practical evidence |
|---|---|---|
| Sale or transfer consideration | INR value received or receivable for the VDA transferred | Exchange order, wallet transaction, invoice, timestamp and valuation source |
| Cost of acquisition | Generally deductible if supported | Buy confirmation, bank debit, prior swap valuation, gift records where relevant |
| Trading fee or platform expense | Usually not separately deductible under the special rule | Keep for reconciliation even when not deductible |
| Resulting transfer income | Generally taxed at 30% plus surcharge and 4% cess | Transaction-wise computation and year summary |
| Loss from another VDA transfer | Generally not available for set-off or carry-forward | Still disclose and retain the transaction record correctly |
For example, crypto bought for ₹1,20,000 and sold for ₹1,70,000 produces a basic transfer income of ₹50,000. At 30%, the base special-rate tax is ₹15,000; 4% cess on that amount is ₹600, making ₹15,600 before considering surcharge, other income interactions and eligible tax credits. The 1% TDS, if deducted on ₹1,70,000, would be ₹1,700 and would generally be claimed as a credit rather than treated as an expense.
Holding crypto without transferring it
A rise in market value while you continue to hold the asset does not by itself create transfer income. Nevertheless, a receipt event such as staking, mining, airdrop, salary or business consideration may create a separate income question before any later transfer. Keep the acquisition date and rupee value even when no immediate transfer tax is due.
Why total exchange profit can be misleading
An exchange's dashboard may net gains and losses, use its own cost method, omit external wallet transactions or treat deposits as acquisitions. The tax computation may require a more restrictive transaction-wise approach. Reconcile every disposal instead of relying on a single “net P&L” number.
Crypto Activity to Tax-Reporting Flow
A defensible crypto return connects each taxable event with valuation evidence, acquisition cost, TDS credit and the final filed schedule.
1% TDS on Crypto: Why It Does Not Equal Final Tax
TDS is generally deducted on the consideration for a qualifying VDA transfer, whereas final tax is computed on taxable income. This difference explains why a loss-making sale can still show TDS and why TDS may be much smaller than the final special-rate liability.
Threshold and deductor questions
Under the earlier section 194S framework, the threshold depended on whether the payer was a specified person, with different annual limits commonly applied. Exchanges often operationalise deduction under CBDT guidelines, while peer-to-peer or off-exchange transactions can place responsibilities on the buyer. For events from 1 April 2026, the Income-tax Act, 2025 and current rules apply; official guidance identifies the corresponding VDA TDS provision and new forms for the transition.
Do not assume that an exchange has handled every obligation. Confirm whether TDS was deducted, whose PAN was used, whether the gross consideration is correct, and whether the credit appears in official tax records.
| Question | 1% TDS | Final VDA tax |
|---|---|---|
| Calculation base | Transfer consideration | Taxable transfer income |
| Purpose | Collection and reporting mechanism | Final income-tax liability |
| Can it apply on a loss sale? | Yes, because it is linked to consideration | No positive transfer income may arise from that disposal, subject to correct computation |
| Where checked | AIS, Form 26AS, certificate/challan, exchange ledger | Return computation, VDA schedule and tax payment records |
| Can excess become refundable? | Eligible credit may contribute to a refund after return processing | Refund depends on total return position and Department processing |
How to reconcile TDS before filing
- Download exchange tax reports and complete trade history.
- Download the latest AIS and Form 26AS from the official e-Filing portal.
- Match PAN, transaction date, gross consideration and TDS amount.
- Identify duplicate entries, reversals, self-transfers and trades executed through more than one platform.
- Claim only supported tax credit and retain a mismatch note for unresolved differences.
How Selling, Swapping, Staking, Mining and Gifting Differ
Not every crypto event should be forced into the same tax label. The first question is whether you transferred an existing VDA, received a new asset as income or gift, or merely moved your own asset without changing beneficial ownership.
| Activity | Primary tax question | Records to preserve |
|---|---|---|
| Sell crypto for INR | Transfer income and TDS | Sale value, cost, exchange statement, bank trail, TDS |
| Swap BTC for ETH | Transfer of BTC and acquisition cost of ETH | Both token quantities, timestamp, INR value, fees and transaction ID |
| Move to own wallet | Usually evidence of continuing ownership rather than sale, if genuinely self-owned | Sending and receiving addresses, transaction hash, exchange withdrawal record |
| Receive staking reward | Character and value of receipt, then later transfer tax | Protocol statement, timestamp, INR valuation and wallet proof |
| Mine crypto | Income/business character, cost issues and later transfer | Mining logs, wallet receipts, electricity/equipment records, valuation |
| Receive gift | Gift-tax exemption or taxable receipt, then later transfer | Donor identity, relationship, gift date, value and transfer proof |
| Use crypto to buy goods | Disposal of crypto plus purchase transaction | Invoice, token amount, INR value, wallet hash and original cost |
Crypto-to-crypto swaps
A swap can produce a taxable transfer even if the trade never touches a bank account. Record the INR market value at the exact trade time. That value may serve both as consideration for the asset disposed of and as a starting cost record for the asset received, subject to the chosen and supportable method.
Self-wallet transfers
A genuine movement from your exchange account to a wallet you control should not be treated like a sale merely because the exchange labels it a withdrawal. Prove common ownership with addresses, transaction hashes and matching quantities after network fees. Unexplained wallet deposits can otherwise look like fresh acquisitions or income.
Gifts and family transfers
The recipient may need to examine gift provisions and exemptions, while the later sale needs cost and holding history. A casual note saying “family transfer” is weak evidence. Keep donor details, relationship proof, wallet trail, valuation and a clear gift declaration for material amounts.
Investing, Trading and Reward Activities Need Different Evidence
The tax result depends on the event, but the quality of the source evidence often determines whether the computation can be defended.
Financial Year, Assessment Year and the New Tax Year from April 2026
Dates matter because the applicable Act, return form and payment challan depend on when the transaction occurred. For income earned up to 31 March 2026, taxpayers continue to use the earlier financial-year and assessment-year framework for the relevant return. From 1 April 2026, the Income-tax Act, 2025 uses the term Tax Year, aligned with the financial year.
| Transaction period | Law framework | Year label to check | Practical action |
|---|---|---|---|
| 1 April 2025 to 31 March 2026 | Income-tax Act, 1961 for that income period | FY 2025-26 / AY 2026-27 | Use the AY 2026-27 utility and applicable Schedule VDA instructions |
| From 1 April 2026 | Income-tax Act, 2025 | Tax Year 2026-27 onward | Use new-Act terminology, current challans and the official return utility released for that tax year |
Do not put a March 2026 sale into Tax Year 2026-27 merely because the return is filed after April. Conversely, do not use an old challan or old section reference for a post-1 April 2026 event without checking current official guidance.
Advance tax planning during the year
If your net tax payable after TDS is material, estimate advance tax as crypto gains arise. A rally in December followed by a loss in February may not produce the netting result you expect because VDA loss set-off is restricted. Update the estimate transaction by transaction and preserve the tax-payment challan.
From Transaction Date to the Correct Return Year
Classify the event by its actual transaction date, then use the official utility for that year.
Records and ITR Reporting: Build the Return from Source Data
An accurate crypto return is a reconciliation exercise. Start with source records rather than the exchange's summary. You need enough detail to prove what was acquired, what was transferred, the INR values, who owned each wallet and how TDS was handled.
A practical transaction register
| Field | Why it matters |
|---|---|
| Date and exact time | Determines tax year and supports market valuation |
| Event type | Separates sale, swap, reward, gift, transfer and fee |
| Asset and quantity | Links disposal to acquisition lot and wallet movement |
| INR consideration/value | Supports taxable amount and later cost basis |
| Cost of acquisition | Key permitted deduction for transfer-income computation |
| Exchange/wallet and transaction ID | Creates an audit trail |
| TDS amount and credit status | Supports tax-credit claim |
| Evidence link or filename | Makes later verification efficient |
Choosing the ITR form
The correct form depends on all your income. Recent official guidance provides Schedule VDA in ITR-2 and ITR-3, but business or professional facts, foreign assets, directorships and other conditions can change eligibility. Do not use ITR-1 simply because salary is your main income if the return contains special-rate VDA income that makes ITR-1 inappropriate.
Foreign exchanges and self-custody wallets
A foreign platform may not provide Indian TDS reports or INR calculations. It may also create foreign-asset or overseas-income questions depending on your residency and facts. Self-custody wallets require stronger ownership proof because no exchange statement explains internal movements. Keep seed phrases private; tax records need public addresses and transaction evidence, not access credentials.
Three Practical Crypto Tax Examples
Example 1: Simple sale with TDS
Riya buys a token for ₹80,000 and sells it for ₹1,30,000. Her transfer income is ₹50,000. The base special-rate tax at 30% is ₹15,000 and cess at 4% is ₹600, before surcharge and other return-level adjustments. If the exchange deducted ₹1,300 as TDS on the ₹1,30,000 consideration, she claims that supported credit against her total tax liability. She does not subtract TDS from sale consideration to calculate profit.
Example 2: One profitable token and one loss-making token
Arjun earns ₹70,000 on one VDA transfer and loses ₹40,000 on another. He should not assume that only ₹30,000 is taxable. The special loss restriction can prevent the ₹40,000 loss from being set off against the gain. He preserves both computations and reports them in the manner required by the current return utility.
Example 3: BTC-to-ETH swap followed by sale
Meera swaps BTC worth ₹2,00,000 for ETH. Her BTC cost is ₹1,40,000, so the BTC disposal may produce ₹60,000 of transfer income. The ₹2,00,000 INR value becomes important evidence for the ETH acquisition. When she later sells the ETH for ₹2,30,000, that later disposal needs its own calculation. Treating both trades as one “cashless swap” would miss the first taxable transfer.
Example 4: Exchange withdrawal to personal wallet
Kabir withdraws 1 ETH from an Indian exchange to a wallet he controls. The exchange report shows a withdrawal and network fee, but beneficial ownership has not changed. He records both wallet addresses, transaction hash and quantity received. When he later sends the ETH to another person for consideration, that later event is examined as the transfer.
Where Crypto Tax Reporting Commonly Goes Wrong
- Using bank withdrawals as the taxable-event list: this misses token swaps, spending and off-exchange transfers.
- Netting annual gains and losses: the VDA loss restriction can make this incorrect.
- Claiming every fee as a deduction: the special rule generally permits only cost of acquisition.
- Ignoring TDS because the sale made a loss: TDS can still appear because it is linked to consideration.
- Treating wallet transfers as new purchases or sales: prove common ownership and network fees.
- Using one exchange's report as complete: include foreign platforms, P2P trades and self-custody wallets.
- Failing to record INR value at swap or reward time: later reconstruction may be unreliable.
- Using an outdated form or challan after 1 April 2026: verify the current Tax Year utility.
Crypto Tax Filing Checklist
- List every exchange, wallet and P2P account used during the year.
- Download complete ledgers before an exchange removes or limits history.
- Separate purchases, sales, swaps, rewards, gifts, fees and self-transfers.
- Assign reliable INR values to non-INR transactions.
- Match each disposal with supportable acquisition cost.
- Compute VDA transfer income transaction by transaction.
- Reconcile TDS with AIS, Form 26AS and certificates or challans.
- Estimate advance tax or self-assessment tax using the correct year and challan.
- Select the ITR form based on your entire income profile.
- Review Schedule VDA or the current equivalent, submit, e-verify and save the acknowledgement.
When Self-Filing May Not Be Enough
Self-filing can work when you have a small number of straightforward INR purchases and sales, reliable exchange statements, clear cost records and matching TDS. Expert review becomes more valuable when the data is fragmented, the tax character is uncertain or the consequences of a mistake are material.
WealthSure's assisted filing support can help organise transaction data, reconcile exchange and wallet records, examine TDS credits, select the appropriate return route and document assumptions. The service is most relevant for multiple exchanges, foreign platforms, swaps, staking, mining, gifts, missing cost basis, revised returns and AIS mismatches.
Summary: Tax on Crypto
Tax on crypto in India requires two separate checks: taxable income from each VDA transfer and TDS credit on the transfer consideration. The headline transfer-income rate is generally 30% plus applicable surcharge and 4% cess, while deductions and loss set-offs are tightly restricted. Selling, swapping or spending crypto can create a transfer even without a bank withdrawal.
The strongest return begins with complete exchange and wallet records, reliable INR valuation, supportable acquisition cost and reconciliation with AIS and Form 26AS. For transactions from 1 April 2026, follow the Income-tax Act, 2025, current Tax Year terminology and official forms or challans.
Your Next Step Before Filing Crypto Income
First, confirm that your transaction register covers every exchange, wallet and swap. Then review cost basis, TDS credit, tax-year classification and the return schedule. A simple return may be manageable through self-filing; a large or fragmented record is safer with assisted reconciliation.
Review your crypto tax filing with WealthSure
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Frequently Asked Questions About Tax on Crypto
What is the tax rate on crypto in India?
Income from transferring a virtual digital asset is generally taxed at 30%, plus applicable surcharge and 4% health and education cess. The special-rate calculation normally allows only the cost of acquisition as a deduction; trading fees, platform charges and most other expenses are not deductible against that transfer income under the special VDA rule. The exact amount payable can also be affected by your other income, surcharge position, TDS credit and the law applicable to the relevant tax year. For transactions up to 31 March 2026, taxpayers commonly refer to section 115BBH of the Income-tax Act, 1961. From 1 April 2026, the Income-tax Act, 2025 applies, so taxpayers should use the current return utility and official terminology for the relevant tax year.
Is 1% TDS the same as the final tax on crypto?
No. The 1% TDS is a tax collection mechanism on the consideration paid for a qualifying transfer; it is not the final 30% tax on taxable VDA income. The TDS credit should be matched with Form 26AS, AIS, exchange statements and the relevant tax certificate or challan record. Your final tax is computed on taxable income after applying the permitted cost rule, then reduced by eligible TDS and other tax credits. A high amount of TDS does not prove that your gain calculation is correct, and a low amount of TDS does not remove the duty to disclose taxable crypto income.
Can I set off a crypto loss against crypto profit or salary income?
The special VDA loss rule is restrictive. A loss from the transfer of a virtual digital asset cannot generally be set off against income under another provision, and it cannot be carried forward to later years. Conservative transaction-wise computation is important because the law does not provide the same broad loss-adjustment treatment that many investors expect from ordinary capital assets. Do not net all exchange activity into one annual figure without reviewing each disposal, swap and transfer. When records are complex, a transaction-level reconciliation is safer.
Does swapping one cryptocurrency for another create a taxable event?
A crypto-to-crypto swap can amount to a transfer of one virtual digital asset and acquisition of another, even when no rupees enter your bank account. You generally need the fair rupee value at the time of the swap, the cost of the asset disposed of, transaction identifiers and the cost basis of the asset received. The platform may display only token quantities, so preserve timestamps and reliable INR valuation evidence. Later sale of the received token requires a separate cost record.
How are gifts, airdrops, staking rewards and mining income taxed?
The answer depends on how the crypto was received and what later happens to it. A gift may be taxable in the recipient's hands under gift provisions unless an exemption applies, such as a qualifying gift from a relative; a later transfer can trigger the special VDA transfer tax. Airdrops, staking rewards and mining receipts may require income recognition based on their facts and valuation, followed by a separate transfer calculation when disposed of. Because official return classification and cost-basis treatment can be fact-sensitive, keep wallet evidence, valuation support and the reason for receipt, and obtain expert review for material amounts.
Which ITR form should I use for crypto income?
The correct ITR form depends on your complete income profile, not only on the fact that you own crypto. Under the return system used for recent assessment years, Schedule VDA appears in ITR-2 and ITR-3, while business or professional facts may point toward ITR-3. ITR-1 is generally not suitable where the return includes income taxable at the special VDA rate. From Tax Year 2026-27, taxpayers should follow the current Income-tax Act, 2025 return utility and eligibility instructions released on the e-Filing portal. Select the form only after considering salary, business income, foreign assets, directorship, losses and other disclosures.
Do I have to pay advance tax on crypto gains?
Advance tax may be payable when your estimated tax liability, after eligible TDS and other credits, crosses the statutory threshold. Crypto gains can arise throughout the year, so waiting until return filing may lead to interest if adequate advance tax was not paid on time. Maintain a quarter-wise estimate using realised transfers rather than market value alone. If a large gain occurs late in the year, recompute promptly and use the official e-Filing tax-payment facility and correct challan for the applicable tax year.
What records should I keep for tax on crypto?
Keep exchange ledgers, buy and sell confirmations, wallet addresses, transaction hashes, timestamps, INR values, bank statements, deposit and withdrawal history, fee details, TDS certificates or challans, Form 26AS, AIS, and records explaining transfers between your own wallets. Also preserve evidence for gifts, airdrops, staking, mining and peer-to-peer transactions. A spreadsheet alone is not enough unless it can be traced back to source records. Retain records in a form that allows each disposal to be linked with its acquisition cost and tax-year classification.
What should I do if AIS or Form 26AS does not match my exchange statement?
Do not copy either source blindly. First match PAN, exchange account, transaction date, gross consideration, TDS amount and whether the entry belongs to a transfer, deposit, withdrawal or internal movement. Download the latest AIS and Form 26AS, compare them with exchange and wallet records, and document the reason for every difference. Use the portal's feedback or correction route where appropriate, but still report your income correctly in the return. A mismatch may require a reconciliation statement and supporting documents, especially when multiple exchanges or self-custody wallets are involved.
When is expert help useful for crypto tax filing?
Expert help is useful when you used multiple exchanges or wallets, made crypto-to-crypto swaps, received staking or airdrop income, traded through foreign platforms, lost access to records, have a large number of transactions, face an AIS or TDS mismatch, or need to revise a return. It is also valuable when you are unsure about business versus investment classification, residency, foreign-asset reporting or the transition to the Income-tax Act, 2025. A professional review should reconcile records and explain assumptions; it should not promise guaranteed savings or ignore unsupported transactions.