Cryptocurrency & VDA Tax in India — Complete Guide (FY 2025-26)
Income from Virtual Digital Assets (VDA) — cryptocurrencies, NFTs, and other digital tokens — is taxed under a special regime introduced via Section 115BBH of the Income Tax Act. Unlike equity or mutual funds, crypto gains don't benefit from long-term capital gains concessions, indexation, or loss set-off.
The Flat 30% Rule
Any gain from transferring a VDA is taxed at a flat 30% rate, plus applicable cess — regardless of your income slab and regardless of how long you held the asset. This applies whether you're a salaried employee in the lowest tax bracket or a high earner in the 30% slab.
1% TDS Under Section 194S
Every crypto exchange in India deducts 1% TDS on the transaction value (not just the profit) when you sell. This TDS is adjustable against your final tax liability — if your actual tax due is lower than the TDS deducted, you can claim a refund when filing your ITR.
No Loss Set-Off, No Carry Forward
This is the harshest part of crypto taxation in India: if you lose money on one crypto transaction, you cannot offset that loss against gains from another crypto asset, against gains from stocks or mutual funds, or against any other income. Losses also cannot be carried forward to future years.
Gifting and Mining
Crypto received as a gift is taxable in the recipient's hands as "Income from Other Sources" if the value exceeds ₹50,000. Crypto received from mining is valued at fair market value on the date of receipt and taxed accordingly, with the cost of acquisition treated as zero for subsequent sales.