Crypto Tax in India 2026: 30% Tax, 1% TDS, and How to File It Correctly

Crypto Tax in India 2026: 30% VDA Tax, 1% TDS, Schedule VDA Filing Rules and No Loss Set-Off Explained

The tax framework for cryptocurrencies in India remains one of the most stringent globally. As of 2026, crypto, NFTs and other Virtual Digital Assets (VDAs) remain taxed at a flat rate of 30%, while many crypto transfers also attract 1% TDS. For investors, the challenge is not only paying tax, but also reporting every transaction in the income tax return.

As per the Income Tax Department, VDAs include Crypto assets, NFTs and other digital assets (apart from Indian currency, central bank digital currency, foreign currency and assets notified). The tax rate for income from the transfer of VDAs is 30% plus surcharge and cess, and only the cost of acquisition is allowed as a deduction. No other item of expense, allowance or loss set-off is allowed. 

How the 30% Crypto Tax Works

The 30% tax rate is levied when one receives income from a VDA transfer. As an investor, for example, if they purchase crypto for Rs. 2,00,000 and sell it for Rs. 3,00,000, the taxable gain is Rs. 1,00,000. The tax levied on these gains would be Rs. 30,000 (excluding surcharge and cess).

However, if another crypto investment makes a loss, that loss cannot be adjusted against the gain. The Income Tax Department has clarified that no set-off of loss can be taken on such a transfer of a VDA against the income of another VDA. This is crucial for active traders for tracking at the transaction level. 

1% TDS on Crypto Transfers

In addition to the 30% tax on gains, Section 194S mandates withholding of 1% of the payment made to a resident for the transfer of a VDA. The TDS will be applied at the time of credit/payment, whichever is earlier. In simple terms, if crypto worth Rs. 1,00,000 is sold, Rs. 1,000 may be deducted as TDS. 

There are threshold limits. Specified persons could be exempt from TDS if the total consideration received does not exceed Rs. 50,000 in a financial year. For others, the threshold is Rs. 10,000. The rules are especially important to exchange users, peer-to-peer sellers, and those who receive crypto as consideration. 

Also Read: Is Crypto Legal in India in 2026? Full Tax, RBI & Regulation Guide

How to File Crypto Tax Correctly

Crypto income is reported on Schedule VDA of the income tax return. The schedule requires transaction-wise details, meaning every transfer has to be reported separately. Investors usually use ITR-2, while taxpayers who consider crypto activity as business income may require ITR-3. 

Investors should download exchange reports, wallet records before filing, purchase price and sale value, and TDS details. The TDS credit should be matched with Form 26AS or AIS before submitting the return. In the absence of the TDS credit, the taxpayer might have to reach out to the exchange/payer for rectification.

FAQs:

1. What is the crypto tax rate in India in 2026?
   Crypto gains in India are taxed at a flat 30% under the VDA tax framework. This applies to income from the transfer of crypto assets, NFTs and other virtual digital assets.
2. Does 1% TDS apply to crypto transactions?
   Yes, Section 194S requires 1% TDS on eligible payments made to residents for VDA transfers. For example, if crypto worth Rs. 1,00,000 is sold, Rs. 1,000 may be deducted as TDS.
3. Can crypto losses be adjusted against crypto profits?
   No, losses from one VDA cannot be adjusted against profits from another VDA. The Income Tax Department allows only the cost of acquisition as a deduction.
4. Which ITR form should crypto investors use?
   Crypto investors generally use ITR-2 if they report crypto as investment income. Taxpayers treating crypto activity as business income may need to file ITR-3.
5. How should crypto tax be filed correctly?
   Taxpayers should report crypto income in Schedule VDA with transaction-wise details. They should also match TDS credits with Form 26AS or AIS before filing the return.