India’s crypto tax rules remain strict and unforgiving for AY 2026-27. A flat 30% tax on all gains, mandatory line-by-line reporting via Schedule VDA, and zero tolerance for loss set-offs mean every transaction must be tracked and reported accurately. Here’s what Indian crypto investors need to know before filing.
The 30% Tax Rate: No Exceptions, No Brackets
Unlike regular income tax, which varies by slab ($0–12% at lower incomes, 30%+ at higher), crypto profits face a uniform 30% rate. A first-time trader realizing ₹10,000 profit pays ₹3,000 in tax. An investor with ₹1 crore in gains pays ₹30 lakhs—the rate never changes.
This rate applies to capital gains from selling, trading, or transferring any Virtual Digital Asset (VDA). Holding periods don’t matter: whether you held Bitcoin for 1 day or 10 years, the 30% rate applies. No long-term vs. short-term distinction exists in the crypto regime.
The flat rate was introduced in the 2022 Budget to simplify crypto taxation, but it also removes any incentive for holding: every transaction triggers the full 30% liability.
Schedule VDA: Line-by-Line Reporting Requirements
All crypto transactions must be reported in Schedule VDA of your ITR. This is not optional—even a single trade must appear.
What to include for each transaction:
- Acquisition date (when you bought or received the asset)
- Acquisition cost (rupees paid to acquire it)
- Transfer/sale date
- Transfer proceeds (rupees received or fair market value at the time of transfer)
- Resulting profit or loss
- Asset type (Bitcoin, Ethereum, altcoin, token name)
Filing forms:
- ITR-2: Salaried employees, freelancers, and income-earners under ₹50 lakhs (not in business)
- ITR-3: Self-employed, business owners, professionals with turnover >₹50 lakhs, or those opting for the business regime
If you have even one VDA transaction, you cannot file ITR-1 (the simplest form for salaried non-business taxpayers). The moment crypto enters your income, ITR-2 becomes mandatory.
1% TDS on Transfers: What You Need to Know
Effective immediately, a 1% Tax Deducted at Source applies to VDA transfers on recognized platforms. For every transaction exceeding ₹10,000, or cumulative transfers over ₹10,000 in a calendar day, 1% is deducted by the platform and remitted to the government.
How it works:
- Platform issues a TDS certificate (Form 16A equivalent for VDAs)
- The 1% reduces your tax liability dollar-for-dollar (if you owe ₹30,000 tax on ₹10 lakh gains, 1% TDS = ₹1,000 credit, leaving ₹29,000 to pay)
- You claim the TDS credit in ITR Schedule TDS
Tracking note: Keep TDS receipts organized by platform. Mismatch between platform records and your ITR claims can trigger notice-days.
The Foreign Exchange Disclosure Requirement (Schedule FA)
Crypto held on foreign exchanges (Kraken, Coinbase, Bybit, etc.) must be disclosed in Schedule FA, the foreign assets schedule. No exemption exists for small holdings—even ₹1,000 of crypto on a foreign platform triggers disclosure.
The income from foreign VDAs (capital gains, staking rewards, airdrop income) is taxed at the same 30% rate. Schedule FA disclosure does not change the tax rate, but omitting it is a separate compliance failure that can invite assessment.
No Loss Set-Off: Your Biggest Tax Planning Limitation
The crypto tax regime prohibits loss set-off across VDAs and against other income. A trader with:
- Bitcoin gain of ₹50,000
- Ethereum loss of ₹30,000
- Salary income of ₹50 lakhs
Must pay tax on ₹50,000 Bitcoin gain at 30% = ₹15,000. The ₹30,000 Ethereum loss is absorbed—it cannot reduce the Bitcoin gain or salary tax. Each VDA is a separate silo; losses do not flow between them, and they do not reduce other taxable income categories.
This is the regime’s most investor-unfriendly provision. In stock markets, you can offset equity losses against equity gains in the same year; in crypto, you cannot. Plan accordingly.
ITR Filing Timeline for AY 2026-27
- July 31, 2026: Standard deadline (non-audit cases, no business turnover trigger)
- September 30, 2026: Extended deadline for those requiring a tax audit (turnover >₹1 crore, business criteria met)
- December 31, 2026: Belated filing (with penalty interest)
Non-filers face 1% monthly interest (capped at 5% per annum) on unpaid tax from the due date. Late filing also invites scrutiny from I-T assessors.
Bottom Line
India’s crypto tax framework is strict by design: 30% flat rate, no loss set-offs, mandatory Schedule VDA reporting, and foreign holdings disclosure. The bright side: the rules are clear, not discretionary. File on time, report every transaction accurately, keep TDS receipts, and use tax software with VDA modules (Cryptact, TaxFetch, others) to avoid errors. Mistakes in reporting invite assessment notice days—make precision a priority.
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Sources and review
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Frequently asked questions
A flat 30% tax applies to all Virtual Digital Asset (VDA) gains, regardless of holding period. This is a special regime separate from normal income tax brackets, so the rate never changes based on your income slab.
Crypto transactions go in Schedule VDA within your income tax return. ITR-2 is for most salaried individuals with crypto activity; ITR-3 is for self-employed, business owners, or professionals. All transactions must be reported line-by-line with acquisition date, transfer date, cost, proceeds, and profit/loss.
A 1% Tax Deducted at Source (TDS) is deducted when you transfer crypto on a recognized platform and the transaction exceeds ₹10,000 in a single transfer or more than ₹10,000 cumulatively in a day. This reduces your tax liability but must be tracked for ITR reporting.
No. Losses from VDA transactions cannot be set off against income from other sources or even against gains from other VDAs. Each VDA and every asset class is siloed—losses stay within that silo and cannot be used to reduce overall taxable income.
Yes. Foreign crypto holdings must be disclosed in Schedule FA with no minimum value exemption. The income from foreign VDAs is taxed the same way (30% on gains), and the reporting requirement applies even if you earned no gains that year.
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