Crypto and VDA Tax in India (2026): 30% Flat Tax, 1% TDS and Schedule VDA
Note: This is general information, not tax advice, and tax rules change. Verify the current figures against the Income Tax Act, the relevant Finance Act and ICAI guidance, and confirm your own position with a qualified Chartered Accountant.
VDAs: a separate tax bucket
The Finance Act 2022 introduced Sections 115BBH and 194S to create a distinct tax treatment for virtual digital assets (VDAs), the legal term for cryptocurrencies, NFTs and similar assets. VDA income sits in its own bucket: it is not capital gains, not business income, and it cannot interact with any other income for set-off purposes.
The 30% flat tax
Under Section 115BBH, any income from the transfer of a VDA is taxed at 30% flat, plus surcharge and cess (effective rate for most individuals is 31.2%). There is no holding period distinction: whether you sold Bitcoin after one day or three years, the rate is 30%. There is also no indexation benefit.
The no-loss-set-off rule
Section 115BBH(2)(b) is stark: losses from VDA transfers cannot be set off against any other income or against gains from other VDAs. If you lose ₹5 lakh on Ethereum and make ₹3 lakh on Bitcoin, you cannot net them. The ₹3 lakh gain is taxed at 30%; the ₹5 lakh loss is simply gone. It cannot be carried forward to offset future crypto gains either.
This is the biggest structural difference between VDA tax and equity or F&O tax. F&O losses can be carried forward for 8 years. VDA losses cannot be used at all. The asymmetry means losing years on crypto are genuinely more expensive than losing years on F&O.
1% TDS on every sale
Section 194S requires a 1% TDS on any payment for the transfer of a VDA above ₹50,000 in the financial year (₹10,000 for specified persons under subsection (3)). Indian crypto exchanges, acting as the payor, deduct this TDS on every qualifying sale and issue Form 26AS credit. When you file your ITR, you claim the TDS amount as a credit against your total tax liability.
Note: TDS is on the gross sale amount, not the gain. A sale of ₹80,000 worth of crypto has ₹800 TDS deducted, regardless of whether the trade was profitable.
Schedule VDA on your ITR
VDA income is reported in Schedule VDA in your ITR. If you have no trading business (no F&O or intraday), you file ITR-2. If you also have F&O or intraday business income, you file ITR-3 and fill Schedule VDA alongside the business schedules. Do not report VDA gains under Schedule LTCG or Schedule OS: they must go in Schedule VDA to be taxed correctly at 30%. See which ITR form traders should use.
For F&O traders who also hold crypto
If you trade F&O and hold crypto, your ITR-3 will have:
- Business income schedule for F&O (non-speculative) and intraday (speculative)
- Schedule VDA for all crypto gains
- STCG/LTCG schedule if you also hold equity
The VDA gain and F&O profit do not interact at all: you cannot use your F&O loss to reduce your crypto tax liability, and you cannot use a crypto loss to reduce your F&O tax. Compute each independently, then total your tax. Advance-tax estimates for the year must include the crypto liability. See advance tax for traders.
Aktai Tax and crypto
Aktai Tax currently handles F&O, equity and advance-tax computation. VDA reporting is a distinct schedule. Confirm your VDA position with your CA and report it in Schedule VDA when filing ITR-3. Your F&O report from Aktai Tax covers everything outside the VDA bucket.
Frequently asked questions
What is the tax rate on crypto gains in India?
Gains from virtual digital assets (VDAs), including cryptocurrency, are taxed at a flat 30% rate under Section 115BBH of the Income Tax Act, plus applicable surcharge and cess. This rate applies regardless of how long you held the asset. There is no distinction between short-term and long-term for VDAs.
Can I set off crypto losses against other income?
No. Section 115BBH(2)(b) explicitly prohibits setting off VDA losses against any other income or any other VDA gains. If you lose money on Bitcoin, you cannot use that loss to reduce your F&O profit or salary income. The losses also cannot be carried forward to future years.
What is the 1% TDS on crypto?
Section 194S requires a 1% TDS (Tax Deducted at Source) on payments for transfer of a VDA when the payment exceeds ₹50,000 in a financial year (₹10,000 for specified persons). Indian crypto exchanges deduct this TDS on every sale above the threshold. You can claim this TDS as a credit when filing your ITR.
Which ITR form do I use for crypto income?
ITR-2 if you have no business income. ITR-3 if you also have F&O or intraday trading income. Use Schedule VDA in whichever form applies to you. Do not declare crypto gains as capital gains or business income, they go in Schedule VDA specifically.
Is gifted crypto taxable?
Yes. Receiving crypto as a gift is taxable under Section 56(2)(x) if the value exceeds ₹50,000. The recipient pays tax on the fair market value at receipt. When the gifted crypto is later sold, the cost basis is the fair market value at the time of receipt.
Can I deduct the cost of acquisition from crypto gains?
Yes. You can deduct the cost of acquisition (purchase price) from the sale price to arrive at your VDA gain. However, you cannot deduct any other expenses such as transaction fees, exchange fees or mining costs beyond the acquisition cost. The net gain is then taxed at 30%.