Use this skill whenever asked about India cryptocurrency or virtual digital asset (VDA) taxation. Trigger on phrases like "crypto tax India", "Bitcoin India tax", "VDA tax", "Section 115BBH", "194S TDS crypto", "crypto TDS India", "virtual digital asset India", "crypto income India", "NFT tax India", "mining tax India", "staking tax India", "WazirX tax", "CoinDCX tax", "crypto loss India", "Schedule VDA", "ITR crypto", "30% crypto tax India", "1% TDS crypto", or any question about the income tax, TDS, or reporting treatment of cryptocurrency, tokens, NFTs, or virtual digital assets under Indian tax law. Covers Finance Act 2022 amendments (Sections 115BBH, 194S, 2(47A)), the no-loss-offset rule, ITR Schedule VDA, and advance tax obligations. ALWAYS read this skill before touching any India crypto work.
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Inventory every VDA transfer for the financial year
List all disposals of virtual digital assets in the FY: sale for fiat, one VDA swapped for another VDA, VDA used to pay for goods or services, gifts made, and NFT sales. Also list crypto received (mining, staking, airdrops, gifts) so it can be classified separately.
Watch for: A VDA covers cryptographic tokens, NFTs, and any other digital asset the Central Government notifies; Indian currency, foreign currency, and the Digital Rupee (CBDC) are excluded. Any disposal or alienation of a VDA is a transfer.
Income-tax Act 1961 s 2(47A)
Establish cost of acquisition per lot
For each transferred VDA, record only the original purchase price as cost of acquisition. Set cost to zero for mined, staked, airdropped, or hard-forked tokens that were not purchased. Do not add exchange fees, gas fees, commissions, or any cost of improvement.
Watch for: Only the cost of acquisition is deductible. Cost of improvement, transfer expenses, and every other deduction are disallowed.
Income-tax Act 1961 s 115BBH(2)(a)
Every figure is drawn from this Tax Guide and cited to its source.
Health & Education Cess
4% on taxFinance Act
Rate (ITA 2025 replacement)
New section as per new Income Tax Act 2025 applicable from financial year fy 2026-27 is Section 393(1). Rate remains same.ITA s 194S
Threshold (general)
₹10,000 aggregate per FYITA s 194S
Threshold (specified persons)
₹50,000 (individual/HUF with turnover ≤ ₹1 Cr)ITA s 194S
Form
Form 26QE (→ Form 141 under ITA 2025)CBDT
Deductible
Purchase price onlyITA s 115BBH(2)
Mined/staked/airdrop tokens
Cost = ₹0ITA s 115BBH
ITR form
ITR-2 or ITR-3 with Schedule VDACBDT notification
Deadline
31 July (non-audit) / 31 October (audit)ITA s 139
Flat rate on VDA gains
Reviewed against the cited tax authorities by Mayur Deokar on 2026-06-06.
Items flagged for further clarification are tracked separately and excluded here.
This block is generated from verified skill_facts — edit the facts, not the prose.
Quick Reference table
| Field | Value |
|---|---|
| Country | India (Republic of India) |
| Tax | Income Tax on Virtual Digital Assets (VDA) |
| Currency | INR (Indian Rupee) — all values in INR |
| Tax year (Assessment Year) | Financial Year 1 April – 31 March (FY 2025-26 = 1 Apr 2025 – 31 Mar 2026; AY 2026-27) |
| Primary legislation | Income Tax Act, 1961: Section 2(47A) (VDA definition), Section 115BBH (flat 30% tax), Section 194S (1% TDS); Finance Act, 2022 (amendments effective 1 April 2022 / 1 July 2022) |
| Replacement under ITA 2025 | Income-tax Act, 2025: Section 393(1) Sl. No. 8(vi) replaces Section 194S for TDS |
| Tax authority | Central Board of Direct Taxes (CBDT); Income Tax Department |
| Filing portal | incometax.gov.in (e-filing portal) |
| Tax rate on VDA gains | Flat 30% (plus 4% health & education cess = effective 31.2%) |
| Surcharge | Applicable based on total income slab (10%–37%) on the 30% |
| TDS rate | 1% on consideration for transfer of VDA (Section 194S) |
| TDS threshold | ₹10,000 (general) / ₹50,000 (specified persons — individuals/HUF with turnover ≤ ₹1 crore or profession receipts ≤ ₹50 lakh) |
| Loss offset | NOT PERMITTED — crypto losses cannot be set off against ANY income |
| Loss carry-forward | NOT PERMITTED |
| Reporting form | ITR-2 or ITR-3 with Schedule VDA |
| Filing deadline | 31 July of the assessment year (31 July 2026 for FY 2025-26); 31 October for audit cases |
| Validated by | Pending — requires sign-off by an Indian Chartered Accountant |
| Skill version | 1.0 |
VDA Definition table
| Category | Included |
|---|---|
| (a) Cryptographic tokens | Any information, code, number, or token generated through cryptographic means providing a digital representation of value — includes BTC, ETH, SOL, etc. |
| (b) NFTs | Non-fungible tokens or any token of similar nature |
| (c) Central Government notified | Any other digital asset the Central Government may notify |
| Excluded | Indian currency, foreign currency, CBDCs (Digital Rupee) |
Conservative Defaults table
| Ambiguity | Default |
|---|---|
| Unknown cost of acquisition | Zero (maximises gain) — STOP if material |
| Unknown whether business or investment | Treat as transfer of VDA under 115BBH (30% flat) |
| Unknown whether mining income or business income | Treat as "income from other sources" (still taxable) |
| Unknown FMV at receipt | Use exchange price at time of transaction |
| Gift of VDA — unknown value | Obtain FMV; if ≥ ₹50,000, taxable in hands of recipient |
Classification Question table
| Classification Question | Answer |
|---|---|
| Is crypto a capital asset in India? | The government treats income from VDA transfer under a special regime (S.115BBH) separate from the regular capital gains provisions |
| Does holding period matter? | NO — flat 30% regardless of holding period |
| Does trader vs investor distinction matter? | NO — flat 30% in either case |
| Can crypto be treated as business income? | Only mining/staking/providing services may be classified as business income or income from other sources; the transfer gain is always 30% under 115BBH |
Tax on Transfer of VDA table
| Component | Rate | Source |
|---|---|---|
| Base tax on VDA transfer income | 30% | S. 115BBH(1)(a) |
| Health & Education Cess | 4% on tax | S. 136C |
| Effective rate (before surcharge) | 31.20% | — |
Surcharge table
| Total Income | Surcharge Rate | Effective VDA Tax Rate |
|---|---|---|
| Up to ₹50 lakh | Nil | 31.20% |
| ₹50 lakh – ₹1 crore | 10% | 34.32% |
| ₹1 crore – ₹2 crore | 15% | 35.88% |
| ₹2 crore – ₹5 crore | 25% | 39.00% |
| Above ₹5 crore | 37% | 42.74% |
Note: Marginal relief applies at surcharge thresholds.
TDS on Transfer of VDA table
| Element | Detail |
|---|---|
| Rate | 1% of consideration |
| Threshold (general) | ₹10,000 aggregate in a financial year |
| Threshold (specified persons) | ₹50,000 aggregate (individual/HUF with business turnover ≤ ₹1 crore or profession receipts ≤ ₹50 lakh in preceding year) |
| Who deducts | Buyer of VDA / exchange platform |
| When | At time of credit or payment, whichever is earlier |
| TDS on crypto-to-crypto | Both parties may be liable (buyer of each VDA in the swap) |
| Form | Form 26QE (now Form 141 under ITA 2025) |
| Deposit deadline | Within 30 days from end of month of deduction |
Permitted Deductions table
| Deductible | Permitted? | Detail |
|---|---|---|
| Cost of acquisition | YES | Purchase price of the VDA only |
| Cost of improvement | NO | Explicitly disallowed under S.115BBH(2)(a) |
| Transfer expenses | NO | Exchange fees, gas fees — NOT deductible |
| Any other deduction | NO | No deduction under any section of the Act |
| Depreciation | NO | Not applicable |
This is the harshest cost basis regime globally. Only the original purchase price can be deducted — no fees, no commissions, no gas costs.
India does not prescribe FIFO/LIFO/average cost for individuals. The Act simply refers to "cost of acquisition." In practice:
Cost Basis Methods table
| Method | Status |
|---|---|
| FIFO | Commonly used by exchanges and software |
| Average cost | Acceptable in practice |
| Specific identification | Acceptable if documented |
| LIFO | Not standard; no prohibition |
The key constraint is that only cost of acquisition matters — method of identifying which lot was sold is secondary.
Zero-Cost Scenarios table
| Scenario | Cost of Acquisition |
|---|---|
| Mined tokens | ₹0 (no cost of acquisition; full value is gain) |
| Staking rewards received | ₹0 (if not purchased) |
| Airdrop tokens | ₹0 |
| Hard fork tokens | ₹0 |
| Gifted VDA (below ₹50,000) | Cost to the previous owner (for computing S.115BBH gain on subsequent transfer) |
Mining table
| Aspect | Treatment |
|---|---|
| Receipt of mined tokens | Taxable as "income from other sources" or "business income" at applicable slab rates |
| Cost basis of mined tokens | FMV at time of mining (if taxed as income on receipt) becomes the cost of acquisition for future transfer |
| Subsequent transfer | 30% flat tax under S.115BBH on (proceeds – cost of acquisition) |
Note: There is ambiguity on whether mining income is taxed at slab rates (as other income) AND THEN the transfer gain is separately taxed at 30%. Conservative approach: tax as income on receipt, then 30% on disposal gain from that FMV cost basis.
Staking table
| Aspect | Treatment |
|---|---|
| Staking rewards received | Income from other sources at FMV on receipt — taxed at slab rates |
| Cost basis of staking rewards | FMV at receipt date |
| Subsequent transfer of staked tokens | 30% under S.115BBH |
Airdrops table
| Scenario | Treatment |
|---|---|
| Airdrop requiring action | Income at FMV on receipt; slab rates |
| Unsolicited airdrop | Potentially taxable as income under Section 56(2)(x) if value > ₹50,000 |
| Transfer of airdropped tokens | 30% under S.115BBH; cost of acquisition = ₹0 or FMV if already taxed as income |
DeFi Lending/Yield table
| Activity | Treatment |
|---|---|
| Interest/yield from DeFi protocols | Income from other sources; taxed at slab rates |
| LP token receipt (deposit into pool) | May constitute transfer of VDA — 30% on any gain |
| LP token withdrawal | Transfer — 30% on gain |
| Impermanent loss | No explicit relief; loss on VDA transfer cannot offset anything |
Hard Forks table
| Scenario | Treatment |
|---|---|
| New tokens from hard fork | Cost of acquisition = ₹0 |
| Transfer of forked tokens | 30% on full proceeds (zero cost basis) |
| Original tokens | Cost basis unchanged |
NFTs are explicitly included in the VDA definition under Section 2(47A)(b).
NFT Treatment table
| Event | Treatment |
|---|---|
| Purchase of NFT | Acquisition — record cost |
| Sale of NFT | Transfer of VDA — 30% flat tax on gain under S.115BBH |
| Creation and sale (artist) | If business income: slab rates; if transfer of VDA: 30% |
| Royalty on secondary sale | Income from other sources; slab rates |
| NFT-for-NFT swap | Transfer of VDA on both sides — 30% on each gain |
| Gift of NFT (value > ₹50,000) | Taxable in hands of recipient under S.56(2)(x) |
| NFT becomes worthless | Loss — cannot be offset or carried forward |
ITR Forms table
| Taxpayer Type | Applicable ITR | Schedule |
|---|---|---|
| Individual with salary + VDA income | ITR-2 | Schedule VDA |
| Individual/HUF with business income + VDA | ITR-3 | Schedule VDA |
| Company | ITR-6 | Schedule VDA |
Schedule VDA requires the following for each VDA transaction:
Schedule VDA fields table
| Field | Detail |
|---|---|
| Type of VDA | Cryptocurrency, NFT, other |
| Date of transfer | DD/MM/YYYY |
| Date of acquisition | DD/MM/YYYY |
| Head of income | Income from transfer of VDA |
| Cost of acquisition | In INR |
| Consideration received | In INR |
| Income from transfer | Gain (consideration – cost) |
TDS Reporting table
| Form | Purpose | Deadline |
|---|---|---|
| Form 26QE / Form 141 | TDS on VDA transfer | Within 30 days from end of month |
| Form 26AS / AIS | Annual Information Statement — reflects TDS deducted | Available on e-filing portal |
| Form 67 | For claiming foreign tax credit (if VDA traded on foreign exchange and tax paid abroad) | Before filing ITR |
Key Deadlines table
| Deadline | Date (FY 2025-26 / AY 2026-27) |
|---|---|
| Advance tax — 1st instalment | 15 June 2025 (15% of total estimated tax) |
| Advance tax — 2nd instalment | 15 September 2025 (45% cumulative) |
| Advance tax — 3rd instalment | 15 December 2025 (75% cumulative) |
| Advance tax — 4th instalment | 15 March 2026 (100%) |
| ITR filing deadline (non-audit) | 31 July 2026 |
| ITR filing deadline (audit cases) | 31 October 2026 |
| Belated return | 31 December 2026 |
Loss prohibition table
| Rule | Detail | Authority |
|---|---|---|
| Loss offset against other income | NOT PERMITTED | S. 115BBH(2)(b) |
| Loss offset against other VDA gains | NOT PERMITTED — loss from one VDA cannot offset gain from another VDA | S. 115BBH(2)(b) |
| Loss carry-forward | NOT PERMITTED | S. 115BBH(2)(b) |
| Loss from other heads against VDA income | NOT PERMITTED — losses from any other head cannot reduce VDA income | S. 115BBH(1)(a) read with S.115BBH(2) |
| Infrastructure/business expenses | NOT DEDUCTIBLE against VDA transfer income | S. 115BBH(2)(a) |
This is the most restrictive loss regime in any major jurisdiction. If you lose ₹5 lakh on BTC and gain ₹5 lakh on ETH in the same year, you pay 30% on ₹5 lakh (the ETH gain) with no offset for the BTC loss.
BTC: Bought ₹10,00,000, Sold ₹5,00,000 → Loss: (₹5,00,000) — CANNOT USE
ETH: Bought ₹3,00,000, Sold ₹8,00,000 → Gain: ₹5,00,000
Tax = 30% × ₹5,00,000 = ₹1,50,000 + 4% cess = ₹1,56,000
The ₹5,00,000 BTC loss is permanently lost.
Anti-Avoidance Provisions table
| Provision | Effect |
|---|---|
| General Anti-Avoidance Rule (GAAR) — Chapter X-A | Applies to impermissible avoidance arrangements; can recharacterise VDA transactions |
| Section 56(2)(x) — Gift taxation | VDA received without consideration or for inadequate consideration (>₹50,000) is taxable as income of the recipient |
| Benami Transactions | Holding VDA in another person's name is covered under the Benami Transactions (Prohibition) Act |
| Transfer pricing | Applicable to international VDA transactions between related parties |
Input: Indian resident individual. Bought 1 BTC at ₹20,00,000 in January 2025. Sold 1 BTC at ₹50,00,000 in September 2025. Exchange fee: ₹5,000 (NOT deductible). Total other income: ₹8,00,000.
Computation:
Consideration: ₹50,00,000
Cost of acquisition: ₹20,00,000
Income from VDA transfer: ₹30,00,000
Tax on VDA: 30% × ₹30,00,000 = ₹9,00,000
Cess: 4% × ₹9,00,000 = ₹36,000
Total VDA tax: ₹9,36,000
Surcharge: Total income = ₹8,00,000 + ₹30,00,000 = ₹38,00,000
Below ₹50 lakh → Nil surcharge
TDS already deducted by exchange: 1% × ₹50,00,000 = ₹50,000
(creditable against total tax liability)
Net VDA tax payable: ₹9,36,000 – ₹50,000 = ₹8,86,000
Exchange fee of ₹5,000 is NOT deductible.
Input: Indian resident. FY 2025-26 transactions:
Computation:
SOL gain: ₹3,00,000 → Tax: 30% = ₹90,000
DOGE loss: (₹3,00,000) → CANNOT offset against SOL gain
Staking income: ₹25,000 → Taxed at applicable slab rate (not 30%)
VDA transfer tax: ₹90,000 + 4% cess = ₹93,600
Staking income tax: at slab rate on ₹25,000
Total: ₹93,600 + slab tax on ₹25,000
The DOGE loss of ₹3,00,000 is permanently lost.
Input: A receives 0.5 BTC as gift from a friend (non-relative). FMV at time of gift: ₹15,00,000. A later sells for ₹20,00,000.
Computation:
Gift taxation (S. 56(2)(x)):
FMV of gift: ₹15,00,000 (exceeds ₹50,000)
Taxable as income from other sources: ₹15,00,000
Tax: at applicable slab rate
On subsequent transfer (S. 115BBH):
Proceeds: ₹20,00,000
Cost of acquisition: ₹0 (cost to previous owner for gifts from
non-relatives — or FMV if S.49 applies)
Gain: ₹20,00,000
Tax: 30% × ₹20,00,000 = ₹6,00,000 + cess
Note: There is potential double taxation on the FMV amount.
Escalate gift of VDA cases to a Chartered Accountant.
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Review status
Accountant-reviewed
Reviewed by a named licensed practitioner against the stated sources, as general reference material.
Accountant-reviewed
Reviewed by Mayur Deokar · 6 June 2026
A named accountant reviewed this complete Guide version within the stated scope. It is not a guarantee.
View review record →Other India computations in the OpenAccountants Tax Library.
Compute the gain on each transfer
For every transfer compute gain as consideration received minus cost of acquisition ONLY. Apply no indexation and no other deduction. Where consideration is another VDA or goods, use fair market value at the time of the transaction.
Watch for: Income from transfer of a VDA is consideration less cost of acquisition; no other deduction and no indexation benefit is available.
Income-tax Act 1961 s 115BBH(2)
Apply the flat VDA tax, cess, and surcharge
Tax each positive transfer gain at the flat VDA rate, add health and education cess on that tax, then apply the surcharge determined by the taxpayer's total income slab (with marginal relief at the thresholds).
Watch for: VDA transfer income is taxed at a flat rate regardless of holding period or trader-versus-investor status, plus cess, plus income-based surcharge.
Income-tax Act 1961 s 115BBH
Enforce the loss rule (no set-off, no carry-forward)
Tax each VDA gain on its own. Do not net a loss on one VDA against a gain on another VDA, do not set any VDA loss against income under any other head, and do not carry any VDA loss forward to a later year. The loss is permanently lost.
Watch for: A loss from transfer of a VDA cannot be set off against any income (including other VDA gains) and cannot be carried forward.
Income-tax Act 1961 s 115BBH(2)(b)
Reconcile 1% TDS under Section 194S
Check whether the 194S TDS applies once aggregate consideration crosses the threshold for the taxpayer (general threshold, or the higher specified-persons threshold for individuals/HUF within the turnover limits). Confirm TDS deducted by the exchange or buyer, match it to Form 26AS / AIS, and credit it against the total tax liability.
Watch for: TDS at 1% of consideration applies to VDA transfers above the applicable annual threshold; the credit reduces final tax payable.
Income-tax Act 1961 s 194S
Handle gifts of VDA
Where a VDA was received without consideration (or for inadequate consideration) and is not from a specified relative, test its fair market value against the gift threshold. If it exceeds the threshold, tax the FMV in the recipient's hands as income from other sources, and separately apply the 115BBH computation on any later transfer.
Watch for: A VDA received as a gift above the monetary threshold, other than from a specified relative, is taxable as income of the recipient.
Income-tax Act 1961 s 56(2)(x)
Report in Schedule VDA, then deliver the working paper
Enter every VDA transaction line (type of VDA, dates of acquisition and transfer, cost of acquisition, consideration, and resulting income) in Schedule VDA of the correct return, ITR-2 for salary plus VDA or ITR-3 where there is business income. Assemble the computation into a working paper, confirm advance-tax exposure, and hand it to the taxpayer with the review offer.
Watch for: Each VDA transfer must be reported in Schedule VDA of ITR-2 or ITR-3; the output is a working paper, not a filed return.
Income-tax Act 1961 s 139
What Mayur checks before signing off
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Add to your AI30% (s 115BBH)ITA s 115BBH
Effective rate (before surcharge)
31.20%Calculated
Loss offset
NOT permitted — crypto losses cannot offset ANY incomeITA s 115BBH(2)
Loss carry-forward
NOT permittedITA s 115BBH
TDS on VDA Transfer (s 194S) — Rate
1% of consideration (rate unchanged); citation updated to Section 393(1) of the new Income Tax Act 2025, applicable from FY 2026-27ITA s 194S; new Income Tax Act 2025 s 393(1)
TDS Threshold (general)
₹10,000 aggregate per FYITA s 194S
TDS Threshold (specified persons)
₹50,000 (individual/HUF with turnover ≤ ₹1 Cr)ITA s 194S
Form
Form 26QE (→ Form 141 under ITA 2025)CBDT
Cost of Acquisition — Deductible
Purchase price onlyITA s 115BBH(2)
Cost of improvement
NOT deductibleITA s 115BBH(2)(a)
Transfer expenses (fees, gas)
NOT deductibleITA s 115BBH
Mined/staked/airdrop tokens cost basis
Cost = ₹0ITA s 115BBH
ITR form
ITR-2 or ITR-3 with Schedule VDACBDT notification
Deadline
31 July (non-audit) / 31 October (audit)ITA s 139
Quick Reference table
| Field | Value | |---|---| | Country | India (Republic of India) | | Tax | Income Tax on Virtual Digital Assets (VDA) | | Currency | INR (Indian Rupee) — all values in INR | | Tax year (Assessment Year) | Financial Year 1 April – 31 March (FY 2025-26 = 1 Apr 2025 – 31 Mar 2026; AY 2026-27) | | Primary legislation | Income Tax Act, 1961: Section 2(47A) (VDA definition), Section 115BBH (flat 30% tax), Section 194S (1% TDS); Finance Act, 2022 (amendments effective 1 April 2022 / 1 July 2022) | | Replacement under ITA 2025 | Income-tax Act, 2025: Section 393(1) Sl. No. 8(vi) replaces Section 194S for TDS | | Tax authority | Central Board of Direct Taxes (CBDT); Income Tax Department | | Filing portal | incometax.gov.in (e-filing portal) | | Tax rate on VDA gains | Flat 30% (plus 4% health & education cess = effective 31.2%) | | Surcharge | Applicable based on total income slab (10%–37%) on the 30% | | TDS rate | 1% on consideration for transfer of VDA (Section 194S) | | TDS threshold | ₹10,000 (general) / ₹50,000 (specified persons — individuals/HUF with turnover ≤ ₹1 crore or profession receipts ≤ ₹50 lakh) | | Loss offset | NOT PERMITTED — crypto losses cannot be set off against ANY income | | Loss carry-forward | NOT PERMITTED | | Reporting form | ITR-2 or ITR-3 with Schedule VDA | | Filing deadline | 31 July of the assessment year (31 July 2026 for FY 2025-26); 31 October for audit cases | | Validated by | Pending — requires sign-off by an Indian Chartered Accountant | | Skill version | 1.0 |
VDA Definition table
| Category | Included | |---|---| | (a) Cryptographic tokens | Any information, code, number, or token generated through cryptographic means providing a digital representation of value — includes BTC, ETH, SOL, etc. | | (b) NFTs | Non-fungible tokens or any token of similar nature | | (c) Central Government notified | Any other digital asset the Central Government may notify | | Excluded | Indian currency, foreign currency, CBDCs (Digital Rupee) |
Conservative Defaults table
| Ambiguity | Default | |---|---| | Unknown cost of acquisition | Zero (maximises gain) — STOP if material | | Unknown whether business or investment | Treat as transfer of VDA under 115BBH (30% flat) | | Unknown whether mining income or business income | Treat as "income from other sources" (still taxable) | | Unknown FMV at receipt | Use exchange price at time of transaction | | Gift of VDA — unknown value | Obtain FMV; if ≥ ₹50,000, taxable in hands of recipient |
115BBH flat rate scope
Unlike most jurisdictions, India does not distinguish between capital gains and income for crypto taxation. Section 115BBH applies a flat 30% tax on any income arising from the transfer of a VDA, regardless of: Holding period (no short-term vs long-term distinction); Frequency of trading; Whether taxpayer is an investor or trader; Whether gain is revenue or capital in nature
Classification Question table
| Classification Question | Answer | |---|---| | Is crypto a capital asset in India? | The government treats income from VDA transfer under a special regime (S.115BBH) separate from the regular capital gains provisions | | Does holding period matter? | NO — flat 30% regardless of holding period | | Does trader vs investor distinction matter? | NO — flat 30% in either case | | Can crypto be treated as business income? | Only mining/staking/providing services may be classified as business income or income from other sources; the transfer gain is always 30% under 115BBH |
transfer definition
Sale of VDA for fiat (INR or foreign currency); Exchange of one VDA for another VDA (crypto-to-crypto swap); Use of VDA as payment for goods or services; Gift of VDA (except to specified relatives under Section 56); Any disposal or alienation of VDA
Tax on Transfer of VDA table
| Component | Rate | Source | |---|---|---| | Base tax on VDA transfer income | 30% | S. 115BBH(1)(a) | | Health & Education Cess | 4% on tax | S. 136C | | Effective rate (before surcharge) | 31.20% | — |
Surcharge table
| Total Income | Surcharge Rate | Effective VDA Tax Rate | |---|---|---| | Up to ₹50 lakh | Nil | 31.20% | | ₹50 lakh – ₹1 crore | 10% | 34.32% | | ₹1 crore – ₹2 crore | 15% | 35.88% | | ₹2 crore – ₹5 crore | 25% | 39.00% | | Above ₹5 crore | 37% | 42.74% |
TDS on Transfer of VDA table
| Element | Detail | |---|---| | Rate | 1% of consideration | | Threshold (general) | ₹10,000 aggregate in a financial year | | Threshold (specified persons) | ₹50,000 aggregate (individual/HUF with business turnover ≤ ₹1 crore or profession receipts ≤ ₹50 lakh in preceding year) | | Who deducts | Buyer of VDA / exchange platform | | When | At time of credit or payment, whichever is earlier | | TDS on crypto-to-crypto | Both parties may be liable (buyer of each VDA in the swap) | | Form | Form 26QE (now Form 141 under ITA 2025) | | Deposit deadline | Within 30 days from end of month of deduction |
Permitted Deductions table
| Deductible | Permitted? | Detail | |---|---|---| | Cost of acquisition | YES | Purchase price of the VDA only | | Cost of improvement | NO | Explicitly disallowed under S.115BBH(2)(a) | | Transfer expenses | NO | Exchange fees, gas fees — NOT deductible | | Any other deduction | NO | No deduction under any section of the Act | | Depreciation | NO | Not applicable |
Cost Basis Methods table
| Method | Status | |---|---| | FIFO | Commonly used by exchanges and software | | Average cost | Acceptable in practice | | Specific identification | Acceptable if documented | | LIFO | Not standard; no prohibition |
Zero-Cost Scenarios table
| Scenario | Cost of Acquisition | |---|---| | Mined tokens | ₹0 (no cost of acquisition; full value is gain) | | Staking rewards received | ₹0 (if not purchased) | | Airdrop tokens | ₹0 | | Hard fork tokens | ₹0 | | Gifted VDA (below ₹50,000) | Cost to the previous owner (for computing S.115BBH gain on subsequent transfer) |
Mining table
| Aspect | Treatment | |---|---| | Receipt of mined tokens | Taxable as "income from other sources" or "business income" at applicable slab rates | | Cost basis of mined tokens | FMV at time of mining (if taxed as income on receipt) becomes the cost of acquisition for future transfer | | Subsequent transfer | 30% flat tax under S.115BBH on (proceeds – cost of acquisition) |
Staking table
| Aspect | Treatment | |---|---| | Staking rewards received | Income from other sources at FMV on receipt — taxed at slab rates | | Cost basis of staking rewards | FMV at receipt date | | Subsequent transfer of staked tokens | 30% under S.115BBH |
Airdrops table
| Scenario | Treatment | |---|---| | Airdrop requiring action | Income at FMV on receipt; slab rates | | Unsolicited airdrop | Potentially taxable as income under Section 56(2)(x) if value > ₹50,000 | | Transfer of airdropped tokens | 30% under S.115BBH; cost of acquisition = ₹0 or FMV if already taxed as income |
DeFi Lending/Yield table
| Activity | Treatment | |---|---| | Interest/yield from DeFi protocols | Income from other sources; taxed at slab rates | | LP token receipt (deposit into pool) | May constitute transfer of VDA — 30% on any gain | | LP token withdrawal | Transfer — 30% on gain | | Impermanent loss | No explicit relief; loss on VDA transfer cannot offset anything |
Hard Forks table
| Scenario | Treatment | |---|---| | New tokens from hard fork | Cost of acquisition = ₹0 | | Transfer of forked tokens | 30% on full proceeds (zero cost basis) | | Original tokens | Cost basis unchanged |
NFT Treatment table
| Event | Treatment | |---|---| | Purchase of NFT | Acquisition — record cost | | Sale of NFT | Transfer of VDA — 30% flat tax on gain under S.115BBH | | Creation and sale (artist) | If business income: slab rates; if transfer of VDA: 30% | | Royalty on secondary sale | Income from other sources; slab rates | | NFT-for-NFT swap | Transfer of VDA on both sides — 30% on each gain | | Gift of NFT (value > ₹50,000) | Taxable in hands of recipient under S.56(2)(x) | | NFT becomes worthless | Loss — cannot be offset or carried forward |
ITR Forms table
| Taxpayer Type | Applicable ITR | Schedule | |---|---|---| | Individual with salary + VDA income | ITR-2 | Schedule VDA | | Individual/HUF with business income + VDA | ITR-3 | Schedule VDA | | Company | ITR-6 | Schedule VDA |
Schedule VDA fields table
| Field | Detail | |---|---| | Type of VDA | Cryptocurrency, NFT, other | | Date of transfer | DD/MM/YYYY | | Date of acquisition | DD/MM/YYYY | | Head of income | Income from transfer of VDA | | Cost of acquisition | In INR | | Consideration received | In INR | | Income from transfer | Gain (consideration – cost) |
TDS Reporting table
| Form | Purpose | Deadline | |---|---|---| | Form 26QE / Form 141 | TDS on VDA transfer | Within 30 days from end of month | | Form 26AS / AIS | Annual Information Statement — reflects TDS deducted | Available on e-filing portal | | Form 67 | For claiming foreign tax credit (if VDA traded on foreign exchange and tax paid abroad) | Before filing ITR |
Key Deadlines table
| Deadline | Date (FY 2025-26 / AY 2026-27) | |---|---| | Advance tax — 1st instalment | 15 June 2025 (15% of total estimated tax) | | Advance tax — 2nd instalment | 15 September 2025 (45% cumulative) | | Advance tax — 3rd instalment | 15 December 2025 (75% cumulative) | | Advance tax — 4th instalment | 15 March 2026 (100%) | | ITR filing deadline (non-audit) | 31 July 2026 | | ITR filing deadline (audit cases) | 31 October 2026 | | Belated return | 31 December 2026 |
Loss prohibition table
| Rule | Detail | Authority | |---|---|---| | Loss offset against other income | **NOT PERMITTED** | S. 115BBH(2)(b) | | Loss offset against other VDA gains | **NOT PERMITTED** — loss from one VDA cannot offset gain from another VDA | S. 115BBH(2)(b) | | Loss carry-forward | **NOT PERMITTED** | S. 115BBH(2)(b) | | Loss from other heads against VDA income | **NOT PERMITTED** — losses from any other head cannot reduce VDA income | S. 115BBH(1)(a) read with S.115BBH(2) | | Infrastructure/business expenses | **NOT DEDUCTIBLE** against VDA transfer income | S. 115BBH(2)(a) |
wash sale irrelevance
India has no specific wash sale rule for crypto. However, this is irrelevant because: Losses cannot be offset against anything anyway (S.115BBH(2)(b)); There is no benefit to crystallising a loss since it cannot be usedS.115BBH(2)(b)
Anti-Avoidance Provisions table
| Provision | Effect | |---|---| | General Anti-Avoidance Rule (GAAR) — Chapter X-A | Applies to impermissible avoidance arrangements; can recharacterise VDA transactions | | Section 56(2)(x) — Gift taxation | VDA received without consideration or for inadequate consideration (>₹50,000) is taxable as income of the recipient | | Benami Transactions | Holding VDA in another person's name is covered under the Benami Transactions (Prohibition) Act | | Transfer pricing | Applicable to international VDA transactions between related parties |
TDS dual purpose
The 1% TDS under Section 194S serves a dual purpose: Revenue collection at source; Creating an audit trail — every VDA transfer is tracked via Form 26AS/AIS
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