Ask any Indian crypto investor to name one rule about their portfolio, and thirty percent crypto tax is usually the first number out of their mouth. It has become shorthand for the entire regulatory relationship between India and digital assets, a flat, unforgiving rate that applies whether you made ten rupees or ten lakh. Four years after Section 115BBH first appeared in the Finance Act of 2022, the rule has not softened, and Budget 2026 confirmed it is not going anywhere either. This crypto guide breaks down exactly how the 30% crypto tax in India works, what changed this year, and what investors actually need to do before the July 31 filing deadline arrives.
What Actually Counts as a Taxable Transfer
Simply holding Bitcoin, Ethereum, or any other Virtual Digital Asset costs you nothing in tax. The trigger is transfer, not ownership, and transfer covers more ground than most new investors expect. Selling crypto for rupees obviously counts. So does swapping one coin for another, since Indian law treats a BTC to ETH trade as selling BTC and separately buying ETH, taxing the BTC leg in full. Spending crypto to pay for goods or services counts too. Even staking rewards and airdropped tokens get taxed twice over, once as income when received at fair market value, and again at 30% when you eventually sell them.
Also Read: Crypto Tax in India: How Cryptocurrency Is Taxed in India (2026 Guide)
Section 115BBH and the 1% TDS, Explained
Section 115BBH is the actual law doing the work here, a flat 30% tax on income from transferring a VDA, plus a 4% health and education cess that pushes the effective rate to roughly 31.2%. No deduction is allowed beyond the original cost of acquisition, meaning trading fees, infrastructure costs, and everything else you spent along the way simply do not count. Sitting alongside it, Section 194S adds a 1% TDS on transfers, deducted automatically by Indian exchanges like Mudrex and CoinDCX once your annual transaction value crosses ₹50,000 for most investors or ₹10,000 for specified categories. TDS is not an extra tax on top, it is an advance credit against what you eventually owe, but it still creates a real cash flow squeeze for anyone trading frequently.
What Changed, and What Did Not, in Budget 2026
Budget 2026 gave the crypto industry one clear answer after months of lobbying for reform, and it was no. The flat 30% rate stayed exactly where it was, the 1% TDS stayed exactly where it was, and the ban on offsetting losses against gains stayed in place too. What did change is enforcement. From April 1, 2026, exchanges and other reporting entities face real financial consequences for sloppy compliance, including daily penalties for missed transaction statements and a flat fine of roughly ₹50,000 for filing incorrect information. CoinSwitch cofounder Ashish Singhal publicly called for the TDS rate to drop from 1% to 0.01% to improve liquidity, a request the government did not act on this cycle.
A Worked Example: Calculating Tax on a Real Trade
Numbers make this easier to grasp than any amount of legal language. Say you bought 0.1 BTC for ₹4,00,000 in January 2026 and sold it in June 2026 for ₹5,50,000. Your taxable gain is ₹1,50,000, and 30% of that comes to ₹45,000, plus a 4% cess on that tax amount, adding roughly ₹1,800, for a total liability near ₹46,800. Separately, since your sale value crossed the TDS threshold, the exchange would have already deducted 1% of ₹5,50,000, or ₹5,500, at the time of sale, which gets credited against your final ₹46,800 bill when you file. If you also lost ₹30,000 trading an altcoin the same year, that loss changes nothing, you still owe the full ₹46,800 on the Bitcoin gain.
Crypto Tax vs Stock Market Tax in India
| Feature | Crypto (VDA) Tax | Listed Stock Tax |
|---|---|---|
| Tax rate | Flat 30% + 4% cess | 20% short term, 12.5% long term |
| Loss set off | Not allowed, ever | Allowed against similar gains |
| Loss carry forward | Not allowed | Allowed up to 8 years |
| TDS | 1% under Section 194S | None on sale of listed shares |
| Deductions allowed | Only cost of acquisition | Brokerage, STT, and more |
| Holding period benefit | None | Lower rate after 12 months |
The gap is not subtle. A stock investor who loses money on one holding can use that loss to shrink the tax bill on a winning trade. A crypto investor cannot, no matter how the two trades are related or how close together they happened.
Common Mistakes That Trigger Notices
The most expensive mistake is assuming crypto to crypto swaps fly under the radar simply because no rupees changed hands. They do not, and exchanges now report transaction level data directly to the Income Tax Department, making mismatches easy to catch. Another frequent error is forgetting that airdrops and staking rewards are taxable income the moment you receive them, not just when you eventually sell. Investors holding assets on foreign platforms also routinely skip Schedule FA disclosure, unaware that it applies regardless of the amount involved. Each of these gaps is precisely where enforcement has tightened hardest heading into the new penalty regime.
How to Actually File, Step by Step
Filing starts with reconciling every exchange statement you have against your own records, since even small mismatches between reported TDS and your declared income can flag a return for review. Report every disposal separately in Schedule VDA, entering the acquisition date, transfer date, sale consideration, and cost basis for each. Cross check that TDS credits appearing in your Form 26AS match what exchanges actually deducted before you claim them. If you hold anything on an international platform, complete Schedule FA regardless of value. Given how unforgiving the no loss offset rule is, most investors managing more than a handful of trades are better off using dedicated crypto tax software or a chartered accountant familiar with VDA rules rather than filing by hand.
Frequently Asked Questions
What is the crypto tax rate in India in 2026? A flat 30% tax under Section 115BBH plus a 4% cess, working out to roughly 31.2% effective, unchanged after Budget 2026.
Can I offset crypto losses against gains? No. Losses from one VDA cannot be set off against gains from another VDA or any other income, and cannot be carried forward to future years.
Is crypto to crypto trading taxable in India? Yes. Swapping one cryptocurrency for another is treated as a full taxable transfer of the first asset at its fair market value.
How much TDS applies to crypto transactions? A 1% TDS applies under Section 194S once annual transaction value crosses ₹50,000 for most investors or ₹10,000 for specified persons.
What is the deadline to file crypto tax in India for 2026? The ITR deadline for FY 2025-26 (AY 2026-27) for most individual, non-audit filers is July 31, 2026.
Do I pay tax if I only hold crypto without selling? No. Holding is not a taxable event in India. Tax applies only when you sell, swap, or spend the asset.
Disclaimer
This article is for informational purposes and does not constitute tax or legal advice. Consult a qualified chartered accountant for guidance specific to your situation.
