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India’s crypto tax framework, introduced on April 1, 2022, is fully intact in 2026. Digital assets are classified as Virtual Digital Assets or VDAs and taxation continues under a special regime rather than standard capital gains rules.
According to the data from the Ministry of Finance, Rs. 511 crore was collected as crypto-related TDS in FY 2024-25 alone. It highlights the scale of participation and the government’s monitoring mechanisms.
Section 115BBH of the Income-tax Act states that profits from the transfer of crypto assets are taxed at a flat 30%, plus a 4% health and education cess.
The calculation is straightforward. Taxable income equals the sale value minus the purchase price. No other deductions are permitted.
For example, if an investor purchases crypto worth Rs. 1,00,000 and later sells it for Rs. 1,50,000 the taxable gain is Rs. 50,000.
The tax payable at 30% would be Rs. 15,000 but it will exclude cess and surcharge where applicable. Notably expenses like brokerage, exchange fees, gas fees, internet costs or advisory charges are not deductible.
A critical provision under the law is that losses from crypto transactions cannot be set off against other crypto gains or any other head of income like salary or business income.
These losses also cannot be carried forward to the next financial year. Each transaction is taxed independently.
Apart from the 30% tax, Section 194S mandates 1% Tax Deducted at Source (TDS) on crypto transfers once annual transaction thresholds are crossed.
For specified individuals and HUFs the threshold is Rs. 50,000 per financial year. For others including larger traders and entities the threshold is Rs. 10,000.
The 1% TDS is calculated on the gross transaction value, not on profits. If crypto is sold for Rs. 1,50,000, Rs. 1,500 is deducted as TDS even if the transaction results in a loss.
Income from mining, staking rewards, airdrops, or referral bonuses is taxed at the individual’s applicable slab rate, not at 30%.
Crypto received as a gift that exceeds Rs. 50,000 in fair market value from a non-relative is taxed as income under Income from Other Sources. Gifts from specified relatives or via inheritance are exempted.
Also Read: How to Calculate and Pay Your Crypto Taxes in India 2026?
Crypto transactions must be reported under Schedule VDA in the Income Tax Return. Failure to disclose gains can attract 1% monthly interest under Sections 234A, 234B and 234C, penalties of up to 200% of the tax due under Section 270A. Even prosecution might be a case in serious cases.
