Cryptocurrencies like Bitcoin, Ethereum, and other Virtual Digital Assets (VDAs) are becoming increasingly popular among Indian investors. But many taxpayers are confused about how crypto income is taxed, where to report it in ITR, and whether losses from crypto trading can be adjusted or carried forward.
In this blog, let me explain the Taxation of Crypto Income in India in simple language with practical examples for AY 2025-26.
Which Section Covers Crypto Taxation in India ?
Crypto income in India is taxed under Section 115BBH of the Income Tax Act, 1961, introduced by the Finance Act, 2022.
This section specifically deals with taxation of Virtual Digital Assets (VDAs), which include:
| Covered VDAs | Examples |
| Cryptocurrencies | Bitcoin, Ethereum, Solana, etc. |
| NFTs (Non-Fungible Tokens) | Digital Art NFTs |
| Other Specified Digital Assets | As notified by the government |
What is the Tax Rate on Crypto Income ?
| Particular | Rate |
| Flat Tax Rate on Crypto Gains | 30% (plus applicable surcharge and cess) |
| TDS Deduction | 1% TDS under Section 194S (if annual transactions exceed ₹10,000 for individuals/HUFs or ₹50,000 for specified persons) |
Key Point:
There’s no benefit of basic exemption limit, no slab rate, and no indexation benefit for crypto income.
How to Calculate Tax on Crypto Income ?
Here’s the simple formula:
Taxable Income = Selling Price – Cost of Acquisition
Example 1:
- You bought Bitcoin for ₹1,00,000 and sold it for ₹1,50,000.
- Profit: ₹50,000
- Tax Payable: 30% of ₹50,000 = ₹15,000 (plus cess)
Example 2:
- Bought for ₹2 lakh, sold for ₹1.20 lakh
- Loss: ₹80,000
- Tax Payable: Zero
| Expenses Not Allowed | Explanation |
| No deduction of mining cost | Treated as capital cost |
| No deduction of transaction fees | Expenses like platform charges cannot be deducted |
| No deduction of electricity cost | Not allowed |
| No indexation benefit | Unlike LTCG, no indexation |
Only the cost of acquisition is allowed as a deduction.
How to Report Crypto Income in ITR ?
For AY 2025-26, report crypto income under the new Schedule VDA introduced in ITR forms.
| Step | Details |
| ✅ Applicable ITR Form | Mostly ITR-2, ITR-3, or ITR-5 (for business traders) |
| ✅ Reporting Schedule | Schedule VDA |
| ✅ Details Required | Transaction-wise breakup: Date of acquisition, Date of transfer, Sale consideration, Cost of acquisition, and Taxable income |
Example:
If you sold Bitcoin, you must show date-wise sale, purchase, and calculate gain for each transaction.
Can Crypto Losses Be Set Off or Carried Forward ?
As per Section 115BBH(2)(b):
- Crypto losses cannot be set off against:
❌ Any other income (Salary, Business, Capital Gains, etc.)
❌ Other crypto gains in the same year - Crypto losses cannot be carried forward to future years.
In short:
Even if you make a loss in crypto trading, you can’t adjust it anywhere.
TDS on Crypto Transactions (Section 194S)
If you’re buying crypto on Indian exchanges:
| Scenario | TDS Applicability |
| If total crypto payment > ₹10,000 (Individuals) or ₹50,000 (for specified persons) | 1% TDS to be deducted by the buyer |
| Crypto-to-Crypto Transactions | TDS applies on both sides |
Exchanges often deduct TDS automatically, but check Form 26AS and AIS carefully.
Other Important Compliance Tips:
- Always reconcile your crypto trades with your AIS (Annual Information Statement).
- Keep proper records like exchange statements, wallet addresses, and transaction IDs.
- If you sold crypto in foreign exchanges, still report it under Indian Income Tax.
- Show TDS credit while filing return.
Summary Table – Crypto Income Taxation at a Glance
| Particular | Treatment |
| Tax Rate | Flat 30% |
| TDS | 1% u/s 194S |
| Deductions | Only cost of acquisition |
| Expenses | Not allowed |
| Loss Set Off | Not allowed |
| Carry Forward | Not allowed |
| Reporting | Schedule VDA in ITR |
| Advance Tax | Mandatory if tax liability > ₹10,000 |
Conclusion
Crypto trading is exciting, but its tax compliance is strict. Understand the 30% flat tax rule, report every transaction, don’t miss TDS, and never ignore advance tax obligations.
