How to calculate crypto tax in India (with Examples)

Crypto taxation can look complicated, especially if you have bought and sold several assets during the year. The basic calculation, however, is easier to understand once you know which amount is taxable.

In India, cryptocurrencies and certain other digital assets are covered under the tax rules for Virtual Digital Assets (VDAs). Income from the transfer of a VDA is taxed at 30% under Section 115BBH, along with applicable surcharge and a 4% health and education cess.

Here is a simple guide to understanding how crypto tax is calculated.

What part of your crypto transaction is taxed?

The 30% tax is applied to the income or profit from the transfer, not automatically to the entire amount you receive from selling the crypto.

A simple calculation is:

Crypto profit = Selling price - Cost of acquisition

Suppose you buy Bitcoin for ₹1,00,000 and later sell it for ₹1,40,000.

Your profit is:

₹1,40,000 - ₹1,00,000 = ₹40,000

The basic tax at 30% would be:

₹40,000 × 30% = ₹12,000

A 4% cess is then applicable on the tax:

₹12,000 × 4% = ₹480

The total in this simplified example becomes ₹12,480, before considering any applicable surcharge or available tax credits.

Example 1: Selling Bitcoin at a profit

Assume you purchased Bitcoin worth ₹2,00,000 and later sold it for ₹2,75,000.

Your gain is:

₹2,75,000 - ₹2,00,000 = ₹75,000

Tax at 30%:

₹75,000 × 30% = ₹22,500

Cess at 4%:

₹22,500 × 4% = ₹900

Total tax in this simplified example:

₹23,400

The actual final tax liability can differ depending on surcharge, TDS credits and the taxpayer's overall circumstances.

What expenses can you deduct?

This is an important difference between crypto and several other investments.

Under Section 115BBH, only the cost of acquisition is generally allowed while calculating income from the transfer of a VDA. Other expenditure or allowances cannot generally be deducted from VDA income.

Investors should therefore maintain clear records showing when an asset was purchased, how much was paid and when it was sold.

What happens if you make a loss?

Crypto losses receive different tax treatment. A loss from the transfer of a VDA cannot be set off against income calculated under other provisions. It also cannot be carried forward to future assessment years.

For example, suppose you make a ₹40,000 gain on one crypto transaction and incur a ₹20,000 loss on another VDA transaction.

You should not simply assume that your taxable crypto income becomes ₹20,000. The VDA rules restrict the ability to set off such losses, so each transaction needs to be reported correctly.

This is one reason keeping transaction-wise records is important.

Also read: Crypto tax saving tips for Indian traders (2026 Guide)

What is the 1% TDS on crypto?

Tax Deducted at Source, or TDS, is another part of India's crypto tax framework.

Section 194S provides for 1% TDS on the consideration paid for the transfer of a VDA, subject to prescribed thresholds. For specified persons, the threshold is ₹50,000 during a financial year, while in other cases it is ₹10,000.

Importantly, TDS is calculated on the transaction value, not on your profit.

Suppose you sell crypto worth ₹2,00,000.

The applicable 1% TDS would be:

₹2,00,000 × 1% = ₹2,000

This ₹2,000 is not another 1% tax on top of your final tax liability. It is tax deducted in advance and can generally be claimed as credit while filing your income tax return, subject to it being correctly reflected in your tax records.

Example 2: Understanding tax and TDS together

Suppose you purchased a crypto asset for ₹1,50,000 and later sold it for ₹2,00,000.

Your profit is:

₹50,000

Basic tax at 30%:

₹15,000

Cess at 4%:

₹600

That gives ₹15,600 in this simplified calculation.

If ₹2,000 was already deducted as TDS on the ₹2,00,000 sale value, that TDS can be considered as a tax credit when determining the remaining amount payable, subject to your tax records and overall return.

This distinction is important because TDS and the 30% VDA tax are not the same thing.

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Is crypto-to-crypto trading taxable?

Selling crypto for INR is not the only transaction that can attract VDA tax rules. Exchanging one VDA for another can also constitute a transfer. The tax provisions specifically recognise situations where consideration for a VDA is paid wholly or partly in another VDA.

For example, exchanging Bitcoin for Ethereum may therefore require the value of the Bitcoin disposed of to be considered when calculating the gain.

This can make frequent trading more complicated because investors may need records for every transfer, not just withdrawals to their bank account.

How do you report crypto income in your ITR?

The Income Tax Department provides a dedicated Schedule VDA for reporting income from Virtual Digital Assets. For AY 2026-27, VDA transactions continue to be reported transaction-wise through the applicable return schedules.

Keep records of your purchase date, purchase value, sale or transfer date, consideration received and TDS deducted. Exchange transaction histories can help when preparing these details.

Conclusion

Calculating crypto tax becomes easier when you separate three numbers: your purchase cost, your sale value and your taxable gain.

Income from VDA transfers is generally taxed at 30%, plus applicable surcharge and 4% cess. Only the cost of acquisition is generally allowed as a deduction, while VDA losses face strict set-off restrictions. A separate 1% TDS may also apply to the transaction value and can serve as a tax credit.

If you trade frequently or have transactions across several wallets and exchanges, maintaining accurate records throughout the year can make ITR filing much easier.

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.