What is 1% TDS on crypto in India?

Under Section 194S, a 1% Tax Deducted at Source (TDS) is applied on all crypto/VDA transactions above ₹10,000 (₹50,000 for specified persons). This is not an additional tax — it is an advance tax deducted by the exchange that you can claim credit for when filing your ITR.

Can I set off crypto losses against other income in India?

No. Under Indian tax law, losses from one Virtual Digital Asset (VDA) cannot be set off against gains from another VDA, or against any other income (salary, business, etc.). Each crypto transaction is taxed independently.

Do I need to pay tax on crypto if I did not sell?

No. Crypto tax in India is triggered only when you sell, trade, or dispose of Virtual Digital Assets. Simply holding (HODLing) crypto does not create a taxable event. However, receiving crypto as a gift above ₹50,000 may be taxable for the recipient.

How do I report crypto in my ITR in India?

Report crypto income in ITR-2 or ITR-3 under "Income from Other Sources" using Schedule VDA (Virtual Digital Assets). You must report all crypto transactions including buys, sells, swaps, and airdrops. CoinDCX provides a tax report that you can use for filing.

Are airdrops taxable in India?

Yes. Crypto received through airdrops is treated as "income from other sources" and taxed at 30%. The value at the time of receipt is considered income. If the airdrop value exceeds ₹50,000, it is taxable as a gift.

Crypto Tax in India (2026) — Complete Guide

Q: What is the crypto tax rate in India?

India taxes cryptocurrency profits at a flat 30% under Section 115BBH of the Income Tax Act. This applies regardless of your income slab. Additionally, a 4% health and education cess is charged on the tax amount, and surcharge may apply for high incomes.

Q: Is cryptocurrency legal in India?

Yes, cryptocurrency is legal in India as of 2026. The Supreme Court overturned the RBI ban in March 2020. While crypto is taxed and regulated (30% tax, 1% TDS, FIU registration required for exchanges), it is not banned. However, crypto is not recognized as legal tender — the Indian Rupee remains the only legal tender.

Q: What is the penalty for not reporting crypto taxes in India?

Non-reporting can attract penalties under Section 270A (50-200% of tax evaded), interest under Section 234A/B/C, and prosecution for willful evasion. The Income Tax department has access to exchange data via FIU-IND and can track unreported transactions.

Last updated: 2026-03-21 · Covers FY 2025-26 rules

India taxes cryptocurrency profits at 30% flat rate under Section 115BBH.

30% tax on all crypto gains — no income slab benefit
1% TDS on transactions above ₹10,000
No loss offset — crypto losses can't reduce tax on other crypto or income
Only cost of acquisition is deductible — no other expenses
Report in ITR-2/ITR-3, Schedule VDA

Tax Rates at a Glance

Component	Rate	Details
Tax on profits	30%	Flat rate under Section 115BBH. No slab benefit.
TDS	1%	Deducted at source on transactions >₹10,000 (Section 194S)
Surcharge	10-37%	On tax amount, if total income exceeds ₹50 lakh
Health & Education Cess	4%	On tax + surcharge
Loss set-off	Not allowed	No set-off against any income, including other crypto
Deductions allowed	Cost of acquisition only	No gas fees, mining costs, or transfer charges

What Triggers a Taxable Event?

You owe crypto tax when you:

Action	Taxable?	Tax Treatment
Sell crypto for INR	Yes	30% on (Sale price − Cost of acquisition)
Swap crypto for another crypto	Yes	30% on fair market value at time of swap
Use crypto to buy goods/services	Yes	30% on (Market value − Cost)
Receive crypto as gift (>₹50K)	Yes (recipient)	Full market value taxed as income
Receive airdrop	Yes	Market value at receipt is income
Mine crypto	Yes (on sale)	Cost of acquisition = ₹0 (no expenses deductible)
Buy crypto with INR	No	Only 1% TDS applies at transaction level
Hold crypto (no transaction)	No	No taxable event until disposal
Transfer between own wallets	No	Not a disposal

How to File Crypto Taxes — Step by Step

Download your transaction report

Log in to CoinDCX and download your annual tax report from the Tax section. This includes all buy, sell, and swap transactions with timestamps and INR values.

Calculate gains per transaction

For each sale/swap: Gain = Sale Price − Cost of Acquisition. Only the purchase cost is deductible. Gas fees, transfer fees, and mining costs are NOT deductible under Section 115BBH.

Fill Schedule VDA in ITR-2 or ITR-3

On the e-filing portal (incometax.gov.in), select ITR-2. Navigate to Schedule VDA. Enter each transaction: date of acquisition, date of transfer, head under which income is offered, cost of acquisition, and consideration received.

Claim TDS credit and pay balance

TDS deducted by CoinDCX appears in Form 26AS/AIS. Claim it as credit. Pay remaining tax (30% of profits − TDS) via Challan 280. File by July 31 deadline.

Important: Not filing crypto taxes can attract penalties of 50-200% of tax evaded (Section 270A), interest charges, and prosecution for willful evasion. The IT department has access to exchange data through FIU-IND.

Tax Calculation Example

Suppose you bought 0.1 BTC for ₹3,00,000 and sold it for ₹4,50,000:

Item	Amount
Sale consideration	₹4,50,000
Cost of acquisition	₹3,00,000
Profit	₹1,50,000
Tax (30%)	₹45,000
Cess (4%)	₹1,800
Total tax payable	₹46,800
TDS already deducted (1% of ₹4,50,000)	₹4,500
Balance to pay	₹42,300

Frequently Asked Questions

What is the crypto tax rate in India?

India taxes cryptocurrency profits at a flat 30% under Section 115BBH of the Income Tax Act. This applies regardless of your income slab — whether you earn ₹5 lakh or ₹50 lakh per year, crypto profits are taxed at 30%. Additionally, a 4% health and education cess applies on the tax amount.

What is 1% TDS on crypto?

Under Section 194S, a 1% Tax Deducted at Source (TDS) applies on all crypto transactions above ₹10,000 (₹50,000 for specified persons). The exchange (like CoinDCX) deducts this before completing your transaction. This is not an additional tax — it's an advance that you can claim credit for when filing your ITR. If your total tax liability is less than TDS deducted, you get a refund.

Can I offset crypto losses against gains?

No. This is one of the strictest aspects of India's crypto tax. Losses from one crypto cannot be set off against gains from another crypto, and definitely not against salary, business, or any other income. Each transaction is taxed independently. There is no carry-forward of losses either.

Do I pay tax if I just hold crypto?

No. Simply holding cryptocurrency does not create a taxable event. Tax is triggered only upon disposal — selling, swapping, spending, or transferring to another person. However, receiving crypto (airdrops, gifts above ₹50,000) is taxable at the time of receipt.

Is converting crypto to another crypto taxable?

Yes. Swapping one crypto for another (e.g., BTC to ETH) is a taxable event. The fair market value at the time of swap is used to calculate gains. This catches many beginners off guard — they think only INR conversions are taxed.

Are crypto airdrops taxable in India?

Yes. Crypto received through airdrops is considered "income from other sources" and taxed at 30%. The fair market value at the time of receipt is your taxable income. When you later sell the airdropped crypto, the cost of acquisition for calculating gains is the value at which income was recognized.

What happens if I don't report crypto income?

Non-reporting attracts penalties: 50% of tax for under-reporting (Section 270A), up to 200% for misreporting, interest under 234A/B/C, and prosecution for willful evasion. The IT department receives data from FIU-registered exchanges like CoinDCX and can track unreported transactions.

Is cryptocurrency legal in India?

Yes. The Supreme Court overturned the RBI ban in March 2020. Crypto is legal to buy, sell, hold, and trade. However, it is not legal tender — only the Indian Rupee is legal tender. Exchanges must register with FIU-IND (Financial Intelligence Unit). The government taxes it (30% + 1% TDS) but has not banned it.

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Sources

Income Tax Act, Section 115BBH — Virtual Digital Assets taxation
Finance Act 2022 — Introduction of VDA tax framework
Section 194S — TDS on Virtual Digital Assets
CBDT Circular — Guidelines for VDA reporting in ITR
Supreme Court of India — Internet and Mobile Association of India v. RBI (2020)

Last updated: 2026-03-21