Introduction
Crypto is legal to buy, hold, and trade in India, but it is taxed heavily and the reporting rules are strict. If you have bought, sold, or swapped any crypto, mistakes now carry penalties.
You will learn how crypto is taxed in India, what counts as a taxable event, how to report crypto in your return, what changes if you hold crypto abroad, and the penalties for non-compliance.
How Crypto Is Taxed in India: The Core Rules
Crypto tax in India rests on rules introduced in 2022 that still apply. They are among the strictest in Indian tax law, and these three shape everything else.
The Flat 30 Percent Tax
Any gain from transferring a Virtual Digital Asset (VDA), the legal term for crypto and NFTs, is taxed at a flat 30 percent under Section 115BBH, with a 4 percent health and education cess and any applicable surcharge on top. The rate does not depend on your income slab or how long you held the asset. Only the cost of acquisition can be deducted, so expenses such as exchange fees generally cannot be claimed.
The 1 Percent TDS
Under Section 194S, 1 percent is deducted at source on transfers of VDAs above a threshold. This is not an extra tax. It is a prepayment adjustable against your final bill, and you claim credit for it when you file. Its other effect is that the tax department sees your transactions as they happen.
No Set-Off for Losses
A loss on one crypto cannot reduce tax on gains from another crypto, or on any other income, and losses cannot be carried forward to future years. Each gain is taxed on its own. A year in which you lose money overall can still leave you with a tax bill, which is why crypto is often described as one of the harshest tax designs in Indian law.
What is a Taxable Event?
A common myth is that tax only applies when you cash out to rupees. Several other actions trigger it. The principle is that a ‘transfer’ of a VDA brings the 30 percent tax into play.
Taxable events generally include selling crypto for rupees, swapping one crypto for another, and using crypto to pay for goods or services. A swap catches people out most often, because no rupees change hands and yet the transfer is still taxable. Crypto received as income, from mining, staking, airdrops, or as payment for work, is also taxable, though the treatment differs: such receipts are generally taxed as income at your slab rate when you receive them, with the 30 percent rate applying later when you transfer the asset.
How to Report Crypto in Schedule VDA
When you file your income tax return, crypto income has its own dedicated section called Schedule VDA, where you declare your gains from Virtual Digital Assets for the year.
This is not a one-way declaration. Crypto exchanges separately report your transactions to the tax department, and your 1 percent TDS appears in the department’s records as well. The system can cross-check what you declared against what the exchange reported, and a mismatch can be flagged automatically.
Keep records all year: the date, amount, and rupee value of every buy, sell, and swap, across every exchange and wallet you use. Reconciling those against your exchange’s reports before you file lowers the risk of a mismatch. Records also matter because you need the cost of acquisition to compute the gain correctly.
How to Report Crypto Held on Foreign Platforms
If you keep crypto on foreign exchanges or wallets, an extra layer of reporting applies. Beyond Schedule VDA, a resident and ordinarily resident taxpayer must disclose foreign assets, including crypto held abroad, in Schedule FA. There is no minimum value below which that obligation disappears, so even a small balance on an overseas platform has to be reported.
The 20 lakh rupee figure often quoted here is widely misread. It is not a disclosure threshold. Since October 2024 it is the level below which the Black Money Act penalty for non-disclosure of non-immovable foreign assets does not apply. The duty to report in Schedule FA still stands beneath that figure.
Non-disclosure of foreign holdings can attract serious penalties under India’s Black Money Act, far heavier than ordinary tax penalties, and can include prosecution. From 1 April 2027, India is expected to join CARF, a global framework under which countries automatically share crypto account information.
Crypto Tax Penalties in India
Compliance is no longer only about paying the right amount. There are now specific penalties for reporting failures on both sides, the platform’s and yours.
On the platform side, from 1 April 2026, crypto exchanges and other ‘reporting entities’ face penalties for failing to report transactions correctly. These include about 200 rupees per day for not filing a required statement, and a flat 50,000 rupees for furnishing incorrect information. These target platforms rather than users, and they push exchanges to report far more accurate data on every account.
For individual taxpayers the exposure is broader. Crypto income that is not declared and is later discovered can attract tax notices and penalties on the shortfall: under-reporting income can carry a penalty of 50 percent of the tax involved, and deliberate misreporting can carry 200 percent. Undisclosed foreign holdings add the Black Money Act risk described above.
Crypto Tax Compliance Checklist
Start with records: keep the date, amount, and rupee value of every crypto transaction throughout the year. Then be clear on which actions are taxable, namely selling, swapping, and spending crypto, along with crypto received as income, while holding alone is not.
When filing, declare your crypto gains in Schedule VDA and disclose any foreign holdings in Schedule FA regardless of value, reconciling everything against your exchange records first. Keep the three core rules in view: the 30 percent tax plus cess, the 1 percent TDS, and the fact that losses cannot be offset. Because the rules are strict and complex, consult a qualified chartered accountant rather than guessing. Rules and thresholds can change, so check the latest official notifications.
FAQs
Q1. How much tax do I pay on crypto in India?
Profits from transferring Virtual Digital Assets are taxed at a flat 30 percent under Section 115BBH, plus a 4 percent cess and any applicable surcharge, regardless of your income slab or holding period. A 1 percent TDS applies under Section 194S on transfers above the threshold. You cannot set off crypto losses, and only the cost of acquisition is deductible.
Q2. What crypto transactions are taxable in India?
The 30 percent tax applies when you 'transfer' a VDA. That includes selling crypto for rupees, swapping one crypto for another, and using crypto to buy goods or services. Crypto received as income from mining, staking, airdrops, or work is also taxable, generally at your slab rate on receipt. Simply buying and holding is not a taxable event.
Q3. How do I report crypto in my income tax return?
Crypto income is reported in Schedule VDA of the Indian income tax return. If you hold crypto on foreign platforms, you must also disclose it in Schedule FA, with no minimum value exemption. Because exchanges separately report your transactions and TDS, the system can cross-check your declaration, so accuracy matters.
Q4. Do I have to pay tax if I only hold crypto and do not sell?
No. Simply holding crypto is not a taxable event. You are not taxed for owning crypto, or because its market value has risen while you still hold it. The 30 percent tax is triggered only when you transfer the asset by selling, swapping, or spending it.
Q5. What are the penalties for not reporting crypto correctly?
From 1 April 2026, exchanges face fines for reporting failures, including about 200 rupees per day for not filing a required statement and 50,000 rupees for incorrect information. For individuals, under-reporting income carries a penalty of 50 percent of the tax involved, and deliberate misreporting carries 200 percent. Undisclosed foreign holdings attract far heavier Black Money Act penalties.
Q6. Do I need to report crypto held on foreign exchanges?
Yes. A resident and ordinarily resident taxpayer must disclose foreign crypto holdings in Schedule FA, and there is no minimum value below which that obligation goes away. The 20 lakh rupee figure often quoted is a penalty threshold under the Black Money Act, not a disclosure threshold. India is also expected to join CARF from 1 April 2027, under which countries share crypto account data.
Crypto tax compliance in India comes down to a few habits: know the 30 percent tax and the 1 percent TDS, track every transaction, report accurately in Schedule VDA and in Schedule FA for foreign holdings, and disclose honestly to avoid penalties. Because the rules are strict, consult a qualified chartered accountant for your situation. Keep learning with CoinDCX's education guides, use only FIU-IND registered platforms, and never invest more than you can afford to lose.
