How to Report Crypto Capital Gains in India: 2026-27 Tax Guide

The August 2026 Rally and Your Tax Obligation

Bitcoin surged to $77,692 on August 20, 2026, driven by regulatory clarity initiatives, while Ethereum reached $2,402 by August 21. If you realized gains by selling during this rally, you are now required to report them in your 2026-27 income tax return (filed by July 31, 2027 for the FY 2026-27). Here is how to structure your compliance correctly.

Understanding Virtual Digital Assets (VDA) Under Indian Tax Law

Since the Finance Act 2022 amended Section 2(47a), virtual digital assets in India include cryptocurrencies like Bitcoin and Ethereum. They are not treated as capital assets for the purposes of Section 47 exemptions — meaning there is no general exemption for long-term capital gains (unlike real estate or listed securities). Your crypto gains are taxed as capital gains based on holding period:

• Short-term capital gains (STCG): Held less than 2 years from April 1 of the purchase financial year → taxed at your slab rate (10%, 20%, 30%, or surcharge, depending on income bracket).
• Long-term capital gains (LTCG): Held 2+ years → taxed at a flat 20% rate plus applicable surcharge.

Reporting in Schedule VDA — Step by Step

Step 1: Gather Your Transaction History

Export or manually compile every transaction from your exchange or wallet:

• Buy/Transfer in: Date, quantity, unit cost in INR (use exchange rate on the transaction date if purchased in USD/EUR).
• Sell/Transfer out: Date, quantity, selling price in INR.
• Swaps or conversions (e.g., Bitcoin to Ethereum): Treat as a sell of one asset and a purchase of another on the same date.

Step 2: Calculate Cost of Acquisition

Use the Weighted Average Cost Method (WACM):

Cost of Acquisition = (Total purchase value in INR) / (Total units acquired)

Example: You bought 1 Bitcoin in July 2025 at $30,000 and another at $40,000 in August 2025:

• Cost = ($30,000 + $40,000) / 2 BTC = $35,000 per Bitcoin
• If you sell 1 BTC at $77,000 on August 21, 2026, your gain = $77,000 – $35,000 = $42,000 (in INR: ~₹35 lakhs using 1 USD = ~₹83 INR)

Step 3: Determine Holding Period

Count from the date of acquisition (not the financial year) to the date of disposal. If you bought on August 15, 2024, and sold on August 15, 2026, that is exactly 2 years — taxed as long-term. If you sold on August 14, 2026, it is short-term.

Step 4: Complete Schedule VDA in Your ITR-1 or ITR-2

Schedule VDA requires:

1. Quantity of VDA acquired during the year: Total units bought (in whole numbers or decimals).
2. Quantity of VDA transferred during the year: Total units sold or swapped.
3. Gross proceeds from transfer: Total sale value in INR.
4. Cost of acquisition (as per WACM): Calculated in Step 2.
5. Gain/(Loss): Proceeds – Cost.

Line-by-line transparency is critical. Revenue authorities now cross-reference blockchain transactions and exchange KYC records.

Tax Rates and Examples

Short-Term Capital Gains (STCG)

Suppose your total taxable income (before crypto gains) is ₹30 lakhs. You realize ₹35 lakh gain on Bitcoin in August 2026:

• Your slab: 30% (for income ₹15–27.5 lakh + surcharge/cess).
• Tax on gain: ₹35 lakh × 30% = ₹10.5 lakh.
• Total tax on crypto: ₹10.5 lakh (no separate deduction; added to your normal tax).

Long-Term Capital Gains (LTCG)

Same ₹35 lakh gain, but held 2+ years:

• Tax rate: Flat 20% (no surcharge benefit, unlike equity LTCG).
• Tax: ₹35 lakh × 20% = ₹7 lakh.
• Savings vs. STCG: ₹3.5 lakh by holding 2+ years.

TDS on Crypto Transactions (Section 194O)

As of August 2026, if you sell crypto on a regulated exchange or peer-to-peer platform:

• TDS at 1% is deducted on the gross proceeds of the sale (not the gain).
• Example: You sell 1 Bitcoin for ₹64 lakhs. TDS = ₹64 lakhs × 1% = ₹64,000.
• This TDS is a credit against your final tax liability, reducing the amount you owe.

Important: Not all platforms implement 1% TDS yet. Check your exchange’s compliance status. If TDS is not deducted at source, you remain liable to pay the full tax by the due date.

Common Mistakes to Avoid

1. Ignoring conversion rates: If you bought Bitcoin in USD and sold in INR, use the RBI/OANDA exchange rate on the transaction date, not an average rate.
2. Forgetting about dust or micro-holdings: Even 0.0001 BTC holdings must be reported; they are not immaterial.
3. Treating gains as business income: Crypto trading by individuals is capital gains, not business income (unless you are a registered dealer). Claiming business losses against salary will trigger assessment.
4. No carry-forward of losses (yet): Short-term crypto losses cannot be carried forward to the next year in India. Long-term losses can carry forward 8 years, but only against long-term gains.
5. Forgetting gifts and inheritance: Inherited or gifted crypto has a cost of acquisition of ₹0 for the recipient (no step-up basis in India). When you later sell, your entire proceeds are a gain.

Bottom Line

The August 2026 rally has brought many Indian investors into taxable territory. Report every transaction in Schedule VDA, use WACM for cost, and file by the July 31, 2027 deadline for FY 2026-27. Discrepancies between exchange records and your ITR invite assessment. If you have crypto holdings spread across multiple exchanges or wallets, consolidate them now before filing.

Sources and review

This article was checked against the primary or authoritative sources below .

• Income Tax Act, 1961 — Schedule VDA Guidelines — India Income Tax Department
• Bitcoin and Ethereum Surge 22% on Regulatory Clarity — August 2026 — Yahoo Finance
• Crypto Tax Compliance in India: Key Changes for FY 2026-27 — Economic Times
• Section 47(viiab): Exemption for Transfer of Virtual Digital Assets — India Income Tax Department
• TDS on Crypto Transactions Under Section 194O — Cleartax

Frequently asked questions

Do I have to report crypto gains if I earned less than ₹100,000?

Yes. There is no exemption limit for crypto capital gains. Even a ₹1 gain must be reported in Schedule VDA (Virtual Digital Assets) in your ITR form. However, if your total income is below the filing threshold (generally ₹2.5 lakhs for most individuals), you may not need to file an ITR unless you have other reasons to file (e.g., carry-forward losses).

What is the tax rate on crypto capital gains in India as of 2026?

Crypto gains are taxed as capital gains. Short-term capital gains (held less than 2 years from April 1 of purchase year) are taxed at slab rates (10%-30% depending on income). Long-term capital gains (held 2+ years) face a flat 20% rate plus 4% surcharge if applicable. As of August 2026, no special exemption under Section 47(viiab) applies to gains; that exemption applies only to transfers, not gains.

How do I calculate the cost of acquisition if I bought Bitcoin when it was at different prices?

Use the Weighted Average Cost Method (WACM), which is the standard in India. Cost = (Total amount spent across all purchases) / (Total units bought). For example, if you bought 0.5 BTC at $30,000 (cost: $15,000) and 0.5 BTC at $40,000 (cost: $20,000), your WACM is ($35,000) / (1 BTC) = $35,000 per BTC. When you sell, multiply your sale units by this average to get total cost.

What if I received crypto as a gift or as salary?

Gifts from relatives are not taxable to the recipient in India (Section 47(vi)). However, gifts from non-relatives are taxable as income at slab rates. Salary paid in crypto is taxable as regular income in the year received at your slab rate, not as capital gains. When you later sell that crypto, any appreciation is capital gains.

Do I need to report every transaction if I trade frequently?

Yes. Every buy, sell, swap, and conversion must be recorded. Reporting only net gains and ignoring intermediate transactions can trigger reassessment notices and penalties. Use Schedule VDA to list each transaction with: date, quantity, rate, gross proceeds, cost, and gain/loss.