Crypto tax in India 2026: 30% on gains, 1% TDS and the new Income-tax Act sections

Anyone in India who sold bitcoin this year, swapped one token for another or received an NFT as a gift is dealing with one of the strictest tax regimes the country applies to any asset. The rules first came in through the Finance Act, 2022. Since 1 April 2026 they sit in the new Income-tax Act, 2025, under different section numbers. The substance has not changed, but there is now a penalty for platforms that do not report crypto trades properly.

This explainer sets out what the law says as of 8 October 2026. It draws on the text of the Act as published in the Gazette of India, the Finance Act, 2026 and the Income Tax Department's own return filing guidance.

Which law applies to which year

The Income-tax Act, 2025 received the President's assent on 21 August 2025 and came into force on 1 April 2026. It drops the old pair of "previous year" and "assessment year" and uses a single "tax year" instead. Crypto sold on or after 1 April 2026 falls under the new Act. Returns for earlier years are still worked out under the Income-tax Act, 1961, which is the law most older guides quote.

The section numbers changed with the switch. Under the 1961 Act, the 30 per cent tax was section 115BBH, the 1 per cent TDS was section 194S and the definition of a virtual digital asset, or VDA, was section 2(47A). In the 2025 Act, the tax sits in section 194 (serial number 4 of its table), the TDS is serial number 8(vi) in the table under section 393(1), and the definition is section 2(111).

What counts as a virtual digital asset

The definition is wide on purpose. Section 2(111) covers any information, code, number or token, other than Indian or foreign currency, generated through cryptographic means or otherwise, that gives a digital representation of value and can be transferred, stored or traded electronically. Non-fungible tokens are named separately, and the Centre can add other digital assets, or exclude some, by notification.

A fourth limb, in force from 1 April 2026, brings in any crypto-asset that relies on a cryptographically secured distributed ledger or a similar technology, whether or not it already fitted the other limbs. In practice bitcoin, ether and most tokens traded on Indian or overseas platforms are VDAs. The RBI's digital rupee is a different animal: it is issued by the central bank as currency, and currency is outside the definition. We reported recently on a programmable digital rupee payment service from Bank of India.

The 30 per cent tax, and why losses hurt

Income from the transfer of a VDA is taxed at a flat 30 per cent, plus surcharge where it applies and 4 per cent health and education cess, whatever your slab. The only thing you can subtract is the cost of acquisition. Electricity for mining, internet bills or interest on money borrowed to buy coins cannot be claimed.

The loss rule is the harsher half. A loss on a VDA cannot be set off against any other income, and it cannot be carried forward to a later year. The return form shows how strictly this works. In Schedule VDA each transfer is a separate row, and a row that ends in a loss is entered as nil, so it cannot reduce the gain shown on another row.

Take a simple case, using our own arithmetic. Suppose you made a gain of Rs 1,00,000 on one token and a loss of Rs 40,000 on another in the same tax year. Tax is charged on the full Rs 1,00,000: Rs 30,000, plus Rs 1,200 as cess, or Rs 31,200 before any surcharge. The Rs 40,000 loss counts for nothing.

How the 1 per cent TDS works

The second layer is tax deducted at source. A person paying for a VDA has to deduct 1 per cent of the consideration and deposit it with the government. Where the payment is wholly in kind, such as one token swapped for another, or the cash part is too small to cover the tax, the payer has to make sure the tax has been paid before handing over the consideration.

There are two annual thresholds. No deduction is needed while the total paid in a tax year stays within Rs 50,000, if the payer is an individual or Hindu undivided family with no business or professional income, or whose turnover in the previous tax year was up to Rs 1 crore for a business or Rs 50 lakh for a profession. For every other payer the limit is Rs 10,000.

TDS is not an extra tax. It is credited against your PAN and you claim it when you file your return. What it does do is put each sale on record in your name.

Gifts and reporting in the return

Crypto received as a gift can be taxed too. Section 92(2)(m) of the new Act, the successor to section 56(2)(x), lists a VDA as "property". If you receive VDAs without paying for them and their total fair market value in a tax year is more than Rs 50,000, the whole value is taxed as income from other sources at your slab rate. Gifts from a relative, on the occasion of your marriage, under a will or by inheritance are exempt.

When you later sell a gifted token, the cost you enter in Schedule VDA is the amount already taxed as a gift or, if nothing was taxed, what the previous owner paid. The schedule is part of ITR-2 and ITR-3. It asks for the date of acquisition, the date of transfer, the cost and the sale value for each transfer.

What is new in 2026

Two changes this year are aimed at platforms rather than investors. Section 509 of the new Act requires reporting entities, to be prescribed by rules, to file statements on crypto-asset transactions and to carry out due diligence to identify users and owners. The Finance Act, 2026 rewrote section 446 to add a penalty of Rs 200 for every day a statement is late, and Rs 50,000 for inaccurate information that is not corrected or for failing the due diligence requirement.

VDAs are also listed next to money, bullion and jewellery in the definition of undisclosed income used in search and block assessment cases. Put together with TDS on every sale and statements from reporting entities, the department's own picture of crypto trades is getting fuller each year, which makes careful entries in Schedule VDA more important than before.

Readers who follow overseas rules can see how the UK regulator is opening its crypto authorisation window, and how Indian and US market regulators used World Investor Week to warn about impersonation scams.

Figures and section numbers above are taken from the Income-tax Act, 2025 as published in the Gazette on 21 August 2025, the Finance Act, 2026 and the Income Tax Department's ITR-2 guidance, read on 7 October 2026. A specific case can turn on its own facts, so check the department's e-filing portal before you file. This is information, not advice.