Crypto Tax in India: 30% Tax, 1% TDS and the Rules Every Investor Should Know
If you buy and sell Bitcoin, Ethereum or any other crypto in India, the income tax rules are very different from shares or mutual funds. Here are the main rules in simple words. Crypto is called a "virtual digital asset" (VDA) in the tax law.
1. A flat 30% tax on profit
Any profit you make from selling or transferring a crypto asset is taxed at a flat 30%. A 4% health and education cess is added on top of the tax, so the effective rate is about 31.2%. It does not matter how long you held the coin or what income slab you are in.
2. You cannot deduct expenses
The only cost you can subtract is what you paid to buy the asset. Exchange fees, internet costs, mining equipment or any other expenses cannot be deducted.
3. Losses cannot be set off
A loss on one crypto cannot be set off against a profit on another crypto, and it cannot be set off against any other income such as salary or shares. You also cannot carry the loss forward to next year.
4. 1% TDS on transfers
When you sell crypto, 1% TDS (tax deducted at source) is generally deducted on the sale value, above certain yearly limits. The exchange usually does this for you. TDS is not an extra tax. It is an advance payment that you can claim as credit when you file your return.
5. An example
You buy Bitcoin for Rs 1,00,000 and sell it for Rs 1,50,000.
- Profit: Rs 50,000
- Tax at 30%: Rs 15,000
- Cess at 4% on the tax: Rs 600
- Total tax: Rs 15,600
- TDS at 1% of the sale value of Rs 1,50,000: Rs 1,500, which you can adjust against the Rs 15,600.
If the Bitcoin had instead been sold for Rs 80,000, you would have a loss of Rs 20,000, but you could not use it to reduce any tax.
6. Reporting
You must report crypto income in your income tax return in the schedule for virtual digital assets, even if the profit is small. Keep a record of every purchase and sale, with dates and amounts, from your exchange statements.
7. GST on exchange fees
The fees that crypto exchanges charge are usually subject to 18% GST. This is paid on the fee, not on your profit.
A safe habit
Download your trade history from every exchange you use before each financial year ends, and keep it safe. If you are unsure about your own case, speak to a qualified chartered accountant.
Tax rules can change in every Budget. Check the Income Tax Department website or a tax professional before filing. This article is for general information and is not tax or investment advice.
Sources: Income Tax Act sections on virtual digital assets (115BBH and 194S); KoinX and other tax guides for FY 2026-27.