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ITR-2 · FY 2025-26

Crypto & VDA Tax Filing in India — FY 2025-26

Flat 30% tax on all crypto gains. No set-off of losses. Schedule VDA in ITR-2.

All Virtual Digital Asset (VDA) income — crypto, NFTs — is taxed at a flat 30% under Section 115BBH. No deduction except cost of acquisition. Losses cannot be set off against any other income or carried forward. 1% TDS on transactions above threshold. File in Schedule VDA of ITR-2.

30%

Tax rate on VDA gains

Cost only

Deductions allowed

Not allowed

Loss set-off

Not allowed

Loss carry-forward

1% (Sec 194S)

TDS on transactions

Schedule VDA

Schedule in ITR

What counts as a VDA — Virtual Digital Asset

Under Section 2(47A) of the Income Tax Act, Virtual Digital Asset includes any information, code, number or token generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value. This covers Bitcoin, Ethereum, and other cryptocurrencies, NFTs, and any asset notified by the Central Government. It does not cover gift cards, rewards points, or conventional digital currencies/e-wallets.

30% flat tax — no holding period distinction

Unlike equity or property, there is no short-term / long-term classification for VDAs. All gains from transfer of any VDA are taxed at 30% (plus surcharge and 4% cess) under Section 115BBH. This applies whether you held the crypto for 1 day or 10 years. The Section 87A rebate is not available on VDA income taxed under Section 115BBH.

No deductions except cost of acquisition

Only the cost of acquisition (the price paid to buy the crypto) is deductible. You cannot deduct: gas fees, exchange commissions, transaction costs, mining expenses, or any other costs. Even brokerage, which is typically deductible for other assets, cannot be deducted for VDAs under the current law.

Loss restrictions — most restrictive in Indian tax law

Section 115BBH(2) imposes the most restrictive loss rules: VDA losses cannot be set off against any other income (salary, capital gains, business income, or other VDA gains). A loss from Bitcoin cannot even be set off against a gain from Ethereum — each VDA is treated independently. VDA losses also cannot be carried forward to future years. This makes tax-loss harvesting strategies ineffective for Indian crypto taxpayers.

TDS under Section 194S

Since July 1, 2022, buyers of VDA must deduct 1% TDS under Section 194S. Exchange platforms (WazirX, CoinDCX, Binance India) automatically deduct TDS on trades. Threshold: ₹50,000 per financial year for specified persons (individuals not required to tax audit under 44AB); ₹10,000 for others. The TDS reflects in your Form 26AS and AIS — ensure it is correctly credited when filing.

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Frequently asked questions

I made ₹5 lakh profit on Bitcoin and ₹3 lakh loss on Ethereum. Is my tax on ₹2 lakh?
No. Under Section 115BBH, VDA losses cannot be set off against VDA gains from different assets. You pay 30% tax on the ₹5 lakh Bitcoin profit = ₹1.5 lakh tax. The ₹3 lakh Ethereum loss is permanently lost — it cannot reduce your Bitcoin tax or be carried forward.
My crypto exchange is offshore (Binance, OKX). Do I still pay Indian tax?
Yes. Indian tax is based on your residential status, not where the exchange is located. As an Indian resident, all worldwide crypto gains are taxable in India. Using a foreign exchange does not exempt you — the Indian Income Tax Department can and does track crypto holdings and transactions through AIS data.
Is mining income taxed at 30%?
Mining has two tax events. When you receive mined crypto, it is treated as business income at the FMV on the date of receipt (taxed at slab rate). When you later sell or transfer those mined tokens, the transfer gain (sale price minus FMV at time of mining) is taxed at 30% under Section 115BBH. The FMV at mining becomes the cost of acquisition for the transfer.
I gifted crypto to my spouse. Is that a taxable transfer?
The gift of crypto itself triggers the 30% VDA tax (transfer of a VDA is taxable regardless of whether it was for consideration or not). Additionally, income from the gifted crypto in the hands of your spouse may be clubbed with your income under Section 64. Gifting crypto to avoid tax is not an effective strategy.

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