Crypto Tax in India: 30% Flat & 1% TDS

Indian crypto tax is among the strictest in the world. Every gain — whether from Bitcoin trading, NFT minting, staking rewards, or play-to-earn games — is taxed at a flat 30% with no expense deduction, no loss set-off, and a 1% TDS on every transaction above Rs. 10,000. This guide covers every facet of Virtual Digital Asset (VDA) taxation, the Schedule VDA filing, and the misconceptions that are causing thousands of crypto investors to underpay or overpay.

What is a Virtual Digital Asset (VDA)?

The Income Tax Act, post Section 2(47A), defines VDA broadly to include:

• Cryptocurrencies (Bitcoin, Ethereum, Solana, Dogecoin, all altcoins)
• Non-Fungible Tokens (NFTs)
• Tokens earned in play-to-earn / GameFi platforms
• Stablecoins (USDT, USDC) — yes, stablecoins are VDAs even though their value is pegged
• Reward tokens from staking, liquidity pools, airdrops

The CBDT has clarified that gift cards, loyalty points, and central bank digital currencies (CBDCs) are NOT VDAs.

The 30% flat tax rate (Section 115BBH)

From FY 2022-23, all gains from VDA transfer are taxed at 30% flat — regardless of holding period, regardless of slab, plus 4% cess. Critically:

• No deduction for any expense other than acquisition cost (no transaction fees, no platform charges, no internet bills)
• No loss set-off — VDA losses cannot offset any other income, including other VDA gains in some interpretations
• No carry-forward of VDA losses to future years
• No basic exemption — even Rs. 100 of profit is taxed at 30%

This is uniformly worse than equity STCG (20%) or LTCG (12.5%). The tax framework is designed to discourage VDA speculation.

1% TDS under Section 194S

From 1 July 2022, every VDA transfer involves 1% TDS deducted by the buyer (or by the exchange acting as buyer):

• TDS on the consideration paid (sale value), NOT on the gain
• Threshold: Rs. 10,000 per transaction (Rs. 50,000 per year for individuals/HUF below threshold)
• Indian crypto exchanges deduct automatically and deposit on your behalf
• Foreign exchanges (Binance global, KuCoin) do not deduct — Indian taxpayer must self-deposit using Form 26QE

The TDS appears in Form 26AS and is adjusted against your final tax liability. Used 100 times to buy/sell, the cumulative TDS can be substantial — even for traders who broke even, the TDS can equal a meaningful percentage of capital.

NFT-specific rules

NFTs are explicitly VDAs. Sale, swap, and minting income are all subject to 30% tax. There are some nuances:

• NFT received as gift: Taxed in the hands of the recipient if value exceeds Rs. 50,000 (unless from relative)
• NFT minting royalty (creator): Treated as income from VDA business, generally also 30% under VDA rules
• NFT used in real life (representing a physical object): Tax authorities have not given clear guidance; conservative treatment is to declare as VDA

Schedule VDA in ITR

For FY 2024-25 onwards, ITR-2 and ITR-3 include a dedicated Schedule VDA. You must report:

• Date of acquisition
• Date of transfer
• Cost of acquisition
• Sale consideration
• Income from transfer (sale − cost)
• TDS deducted under Section 194S

Aggregating thousands of trades into Schedule VDA is tedious. Most major Indian exchanges (CoinDCX, WazirX, ZebPay) now provide pre-formatted P&L exports for tax filing. For self-custody wallets and DEX trades, tools like KoinX and CoinTracker generate India-compliant statements.

Worked example

Sandeep traded crypto throughout FY 2025-26. His summary:

Common-sense expectation: tax 30% × Rs. 1,80,000 = Rs. 54,000.

Actual tax: Each gain is taxed individually. Loss on ETH cannot offset BTC and SOL gains in some interpretations. Sandeep declares Rs. 1,50,000 + Rs. 90,000 = Rs. 2,40,000 of gains, paying Rs. 72,000 + cess. The Rs. 60,000 loss is dead weight.

Common mistakes

• Not declaring foreign-exchange trades. Trades on Binance global, KuCoin, etc. are still taxable in India. Schedule FA also requires foreign asset disclosure if total exceeds Rs. 5 lakh.
• Treating staking rewards as zero-cost income. Staking and airdrop rewards are taxed at slab rate when received, then capital gains rules apply when sold. Cost basis is the FMV on receipt date.
• Forgetting to file Form 26QE for self-deposited TDS. If you bought crypto from a foreign exchange or peer-to-peer, you owe the 1% TDS yourself. Penalty for non-compliance is 30% of TDS amount.
• Using FIFO vs LIFO inconsistently. The Income Tax Act prefers FIFO for VDA cost basis. Pick FIFO and stick with it across all your filings.