Income Tax

Crypto Tax in India: 30% Rate, 1% TDS and Record-Keeping

Crypto Tax in India: 30% Tax, 1% TDS and the Compliance Reality of VDAs

CA Nikhil Gupta·Reviewed 24 June 2026·3 min readDigital India: Payments, UPI & Data Regulation

Special rate30% plus applicable surcharge and cessApply to covered VDA income

Withholding1% TDS on covered transfer considerationThreshold and payer process matter

TransitionNew Act from 1 April 2026Use tax-year-specific forms and section mapping

1. Current position

2-minute answer: Every crypto/VDA disposal - selling for rupees, swapping one token for another, or spending crypto to buy something - is a SEPARATE taxable event at a flat 30% rate (plus surcharge/cess), regardless of how long it was held. No expenses can be deducted except the cost of acquisition, and a loss on one VDA CANNOT be set off against a gain on another VDA or any other income - each VDA’s gains and losses are computed in isolation. Separately, 1% TDS is withheld on covered transfers - this is only a credit against final tax, not the tax itself, and traders who transact frequently can find the 1% TDS creates a genuine cash-flow squeeze well before the actual tax liability is even computed in the return.

India’s special tax regime for virtual digital assets continues to require careful year-specific application. Income-tax portal guidance describes the 30% special-rate framework plus applicable surcharge and cess, restrictions on deductions and loss set-off, and 1% withholding on covered transfers subject to thresholds and conditions. From 1 April 2026, use the Income-tax Act, 2025 forms and mapping for new-year events while preserving legacy treatment for earlier events.

For broader context, see the Income Tax and Salary Hub.

2. How it works in practice

Each disposal—sale for rupees, swap for another token or purchase using a token—may create a taxable event. Exchange reports can omit off-platform transfers, wallet movements or cost basis. TDS is a tax credit, not the final tax liability, and it can create cash-flow mismatches for frequent traders.

Use the TDS Calculator and Common Rate Finder — FY 2026–27 to apply these points to your figures or facts.

A reliable decision separates the legal rule, the commercial contract and the actual cash flow. A regulatory permission does not guarantee suitability, and a product label does not override the substance of the transaction.

3. Key rules and measurement boundaries

Item	Position	How to read it
Special rate	30% plus applicable surcharge and cess	Apply to covered VDA income
Withholding	1% TDS on covered transfer consideration	Threshold and payer process matter
Transition	New Act from 1 April 2026	Use tax-year-specific forms and section mapping

4. Practical example

A person buys a token for ₹2 lakh, sells it for ₹2.8 lakh and has ₹2,800 TDS reflected. The taxable gain is not simply the bank withdrawal. The ₹80,000 transfer result must be computed under the applicable VDA rules, with the TDS claimed as credit. A later loss on another token may not be freely set off against that gain.

5. Action checklist

Export complete exchange and wallet histories.
Classify transfers, swaps, airdrops and fees separately.
Reconcile TDS credits with Form 26AS/AIS and payer records.
Use the correct form for the event date and tax year.
Preserve INR valuation methodology at each taxable event.

6. Evidence and document checklist

Trade and order history.
Wallet addresses and transaction hashes.
INR value source and timestamp.
TDS certificate/statement and AIS/26AS.
Cost-basis and fee working.

7. Common mistakes

Taxing only amounts withdrawn to a bank.
Ignoring token-to-token swaps.
Assuming all VDA losses can offset gains.
Treating TDS as the final tax.

8. Red flags

Exchange statement cannot reconcile to wallet balances.
TDS deducted but not visible in tax records.
Unexplained transfers to offshore wallets.
Advice relies on an old section number without tax-year mapping.

9. Complaint or escalation route

Use the Income-tax portal grievance process for statement or form issues and obtain tax advice for classification, foreign-asset reporting, business income, mining, staking or cross-border transactions. Fraud complaints belong with the exchange, bank and cybercrime authorities.

10. FAQs

Is crypto taxed only when converted to rupees?

No. A transfer or swap can be taxable even without a bank withdrawal.

Can VDA losses be set off freely?

The special regime restricts deduction and loss set-off; apply the rule for the relevant tax year.

Is 1% TDS the final tax?

No. It is withholding credit; final liability is computed in the return.

Which form applies after 1 April 2026?

Use the portal’s new-Act form mapping for events under the Income-tax Act, 2025; earlier events may use legacy forms.

11. Official sources

Information date: 20 June 2026. Rates, thresholds, portal processes and live proceedings can change; use the linked official material for the transaction or filing date.

Current-law status: reviewed 24 June 2026 - the 30% VDA rate, no-loss-set-off restriction and 1% TDS regime described above were current as of this review. Disclaimer: This is an educational checklist, not a computation of any specific taxpayer’s VDA liability - actual classification (capital vs business income), applicable form and TDS reconciliation depend on the taxpayer’s actual transaction history and should be confirmed with a tax professional before filing.

For the connected rule, example or next step, see Tax on Crypto and VDA Losses: What Cannot Be Set Off.

Frequently Asked Questions

Is crypto taxed only when converted to rupees? ▼

No. A transfer or swap can be taxable even without a bank withdrawal.

Can VDA losses be set off freely? ▼

The special regime restricts deduction and loss set-off; apply the rule for the relevant tax year.

Is 1% TDS the final tax? ▼

No. It is withholding credit; final liability is computed in the return.

Which form applies after 1 April 2026? ▼

Use the portal’s new-Act form mapping for events under the Income-tax Act, 2025; earlier events may use legacy forms.

Source and review trail

Use the current official instrument, portal or regulator publication before acting. This panel separates the category authority from page-specific references.

Primary category: Income Tax
Official starting point: www.incometax.gov.in

Page source links

For the connected rule, example or next step, see TDS Vendor Master Controls: PAN, Section, Rate and Threshold Checks.

For the connected rule, example or next step, see ITR for Crypto and VDA Transactions AY 2026-27.

Crypto Tax in India: 30% Rate, 1% TDS and Record-Keeping

1. Current position

2. How it works in practice

3. Key rules and measurement boundaries

4. Practical example

5. Action checklist

6. Evidence and document checklist

7. Common mistakes

8. Red flags

9. Complaint or escalation route

10. FAQs

Is crypto taxed only when converted to rupees?

Can VDA losses be set off freely?

Is 1% TDS the final tax?

Which form applies after 1 April 2026?

11. Official sources

Frequently Asked Questions

Related Case Studies

Source and review trail

Page source links

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