Crypto Tax in India 2026: Complete Tax Guide for Investors

India’s crypto tax framework is clear, but confusing to apply. The rules haven't changed since 2022, yet thousands of investors still get them wrong.

You buy Bitcoin. You sell it at a profit. What do you owe the government? Not income tax rates. Not your slab. A flat 30% tax, with no deductions, no loss set-offs, and a filing requirement that catches people off guard.

This guide breaks down what you actually owe, from TDS thresholds to ITR filing to common pitfalls that cost investors money and compliance headaches.

How India taxes cryptocurrency — The 2022 finance act changes

Before 2022, crypto taxation sat in a legal gray zone. The Income Tax Act had no specific framework. Assessors applied different rules depending on the interpretation.

Then came the Union Budget 2022. Finance Act 2022 added one critical definition: Virtual Digital Asset (VDA).

Under Section 2(47A) of the Income Tax Act, a VDA is any information, code, or number that represents value exchanged in a virtual environment. Cryptocurrencies fall here. So do NFTs.

The framework applies from April 1, 2022 (FY 2022-23 onwards). If you held crypto before April 2022, your old positions were grandfathered, no tax on unrealized gains. Only transactions after April 1, 2022 trigger tax.

Three new sections emerged:

• Section 115BBH: 30% flat tax on VDA gains
• Section 194S: TDS (Tax Deducted at Source) on crypto transactions
• Schedule 6 (Form 15CA/15CB): Reporting requirements

The government classified crypto taxation outside your normal income slab. This is crucial. Your crypto gains don’t add to your salary or business income. They are taxed separately at a flat rate.

The 30% tax rule — Section 115BBH explained

Here is the rule: If you make a profit on a crypto sale, you pay 30% flat tax on that gain. No deductions. No adjustments for inflation. No exemptions.

Example: You bought 1 Bitcoin at ₹30 lakh. You sold it at ₹50 lakh. Gain = ₹20 lakh. Tax = 30% of ₹20 lakh = ₹6 lakh.

But there is one deduction allowed, the cost of acquisition. This is straightforward: what you originally paid for the crypto.

You can’t deduct transaction fees, brokerage charges, network fees, or any other cost incurred during the holding period. Only the original purchase price reduces your taxable gain.

On top of the 30%, you also pay 4% cess (Health and Education Cess), making the effective rate 31.2%.

This applies regardless of your income tax slab. Whether you're a student or a billionaire, the rate is the same: 30% + 4% cess.

This is where many investors trip up. If you're in the 30% slab anyway, it is no different. But if you're in the 20% slab, you are paying a premium. If you are in the 5% slab, this is significantly higher.

TDS on crypto transactions — Section 194S in practice

Section 194S brings TDS (Tax Deducted at Source) into the picture. When you sell crypto on an exchange like Giottus, a 1% TDS is automatically deducted.

The threshold matters:

For specified persons: TDS applies when annual crypto sales exceed ₹50,000. Specified persons include individuals with business income and HUFs with turnover.
For others (you, if you're a salaried employee): TDS applies when annual crypto sales exceed ₹10,000.

This is deducted at source by the crypto exchange (Giottus, for example, deducts it automatically). The exchange then issues a TDS certificate similar to a Form 16B.
For P2P transactions (peer-to-peer sales not on an exchange), the buyer deducts TDS if applicable.

TDS isn’t an additional tax. It is an advance payment toward your 30% tax liability. When you file your ITR, you claim credit for this TDS. If TDS exceeds your final tax liability, you get a refund.

Key point: Even if you fall below the TDS threshold, you must still file an ITR and report all crypto gains. TDS is just the mechanism for advance payment.

What Counts as a Taxable Crypto Event?

The Income Tax Act considers transfer of crypto a taxable event under Section 115BBH. But what exactly is a ‘transfer'?

Taxable events (you owe tax):

• Selling crypto for fiat (INR, USD, etc.)
• Trading crypto-to-crypto (swapping Bitcoin for Ethereum, for example)
• Using crypto to purchase goods or services
• Receiving crypto as payment for work (staking rewards, mining, etc.)
• Receiving crypto as a gift—only if fair market value on receipt date exceeds ₹50,000

Non-taxable events (you don't owe tax):

• Receiving crypto as a gift below ₹50,000 fair market value
• Transferring between your own wallets
• Holding crypto (unrealized gains aren’t taxed)

Staking rewards are an important edge case. When you earn staking rewards, you recognize income at fair market value on the day you receive them. Then, when you later sell those rewards, you pay 30% tax on the appreciation since receipt.

Same logic applies to airdrops and forks. Income is recognized at FMV on receipt. Later sales trigger capital gains tax.

Losses, set-offs, and the painful reality

This is where Section 115BBH becomes harsh.

If you sell crypto at a loss, you can’t use that loss to offset gains from another crypto. You can’t use it to offset your salary income, business income, or rental income. You can’t carry the loss forward to next year either.

Losses under Section 115BBH are simply lost.

Example: You bought Ethereum at ₹2 lakh and sold at ₹1.5 lakh. Loss = ₹50,000. This loss cannot reduce a Bitcoin gain. It cannot reduce your salary. It expires worthless.

This is a critical asymmetry in the Indian crypto tax code. Gains are taxed at 30%. Losses are not deductible. Many experienced investors find this unfair, and they are not wrong. But it is the law as written.

The practical implication: Be strategic about timing. If you have large gains from one crypto, you might defer selling another crypto at a loss (to preserve future optionality, even if it doesn’t help tax-wise).

How to file Crypto taxes in India — Step by step

Step 1: Gather your data

Download your transaction history from your exchange (Giottus.). Export a complete record of:

• Purchase date, quantity, price paid
• Sale date, quantity, sale price
• Rewards, airdrops, staking income (with date and FMV)
• Transfer dates (in case of transfers between wallets)

If you use multiple exchanges, compile everything into a single spreadsheet.

Step 2: Calculate gains and losses

For each transaction:

• Identify the cost of acquisition (purchase price in INR)
• Identify the sale price (in INR, using the rate on sale date)
• Calculate gain or loss: Sale Price – Cost of Acquisition
• Sum all gains. Sum all losses. Note: Losses don't reduce gains.

Step 3: Calculate tax and TDS redit

• Tax = 30% of total gains + 4% cess = 31.2% of total gains
• TDS credit = Sum of all 1% TDS deducted by exchanges and P2P sellers
• Tax payable = Tax – TDS credit
• If TDS exceeds tax, the difference is a refund due to you.

Step 4: Choose the right ITR form

If you have crypto gains, you cannot file ITR-1 (Sahaj) or ITR-4 (Sugam). You must file ITR-2 or ITR-3:

• ITR-2: For salaried individuals or those with income from house property, other sources, and capital gains (including crypto)
• ITR-3: For self-employed individuals with business or professional income, plus crypto gains

The difference: ITR-2 has a simplified format. ITR-3 requires detailed business schedules.

Step 5: Fill schedule 6 (Capital gains) in your ITR

In your ITR-2 or ITR-3, you will find a ‘Capital Gains’ section (Schedule 6 in ITR-2). Here, you report:

• Total turnover of VDA (all transactions)
• Cost of acquisition (total purchase cost)
• Taxable gain (total gains, since losses don't reduce them)
• Tax under Section 115BBH
• TDS paid

Many ITR forms now have dedicated VDA fields. Use them.

Step 6: Annexure & supporting documents

Attach exchange statements showing TDS certificates. Keep transaction records for 6 years (per Income Tax statute of limitation).
File the ITR before the deadline: July 31, 2026 for FY 2025-26.

Step 7: Claim TDS refund (If applicable)

If TDS exceeds your tax liability, you will receive a refund. Most refunds are processed within 3–6 months of filing.

Crypto tax on different transaction types — A comparison

Key takeaway: Only transactions under Section 115BBH (the 30% flat tax) don't allow losses to offset gains. Staking and airdrop income are taxed as regular income, which allows normal deductions and loss set-offs.

Download Giottus

How Giottus handles TDS deduction for you

At Giottus, when you sell crypto, we automatically calculate and deduct 1% TDS. This happens in real-time, right at the point of sale.

Here is what we do:

Automatic TDS calculation: Our system evaluates whether you've crossed the ₹10,000 or ₹50,000 annual threshold. If yes, 1% is deducted from your proceeds.
TDS certificate: We issue a TDS certificate (Form 16B equivalent) for each financial year. This certificate is proof of TDS paid and is required when filing your ITR.
Transaction history export: Our platform lets you download a complete transaction history with dates, rates, and amounts, formatted to match ITR requirements.
Gain/Loss calculation: Our tools (where available) help you calculate gains and losses. However, remember: you are responsible for final accuracy. Always verify independently.
Why 1% TDS? Because the government assumes you will ultimately owe 30%. The 1% TDS is a withholding mechanism. An advance payment that you later adjust when filing your ITR.
If you have been overcharged TDS due to multiple exchanges, you can claim a refund in your ITR. This is straightforward: credit all TDS paid, and if it exceeds your final liability, you get the difference back.

Common Mistakes Indian Crypto Investors Make at Tax Time

Mistake 1: Not reporting crypto at all
Many investors assume that crypto is unreported income. It is not. If you have sold crypto or earned rewards, it is reportable income. Non-reporting invites income tax department scrutiny, penalties, and interest.
Mistake 2: Mixing up the tax rules
Crypto doesn’t follow your normal income tax slab. It is not 5%, 20%, or 30% depending on salary. It is always 30% flat, plus 4% cess. Trying to apply your normal slab to crypto gains leads to underpayment and interest.
Mistake 3: Attempting loss set-offs that don’t work
If you lost ₹2 lakh on Ethereum and gained ₹3 lakh on Bitcoin, you owe tax on the full ₹3 lakh. Many investors still try to offset and end up filing incorrectly.
Mistake 4: Ignoring staking rewards and airdrops
Investors often forget to report staking income and airdrops as regular income (not under Section 115BBH). This leads to incomplete ITRs and potential queries.
Mistake 5: Using wrong cost basis
Some investors average their cost basis across multiple purchases, which is mathematically correct but not the way the Income Tax Act calculates gains. Use actual purchase price for each lot, or adopt a clear FIFO (First In First Out) method and stick with it.
Mistake 6: Not keeping exchange records
Exchanges can go down or restrict access. Download your complete transaction history regularly. Keep copies for at least 6 years.
Mistake 7: Forgetting to report section 194S TDS
Even if TDS was deducted, you must still file an ITR and report the gain. The TDS is just an advance payment. Not reporting the gain is a violation, even if TDS was withheld.
 

Disclaimer: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.