If you traded crypto this year, the tax rules are unusually strict — a flat 30%, a 1% TDS the exchange already deducted, and no set-off for losses. Here is how Virtual Digital Asset taxation actually works and how to file Schedule VDA correctly.
CA Rahul Dang
Founder & Practice Lead
Crypto is taxed in India under some of the most rigid rules in the entire income-tax framework — and the exchanges already report your trades to the department. If you bought, sold, or transferred any Virtual Digital Asset (VDA) during the year, your return must reflect it correctly. Here's the plain-English version for AY 2026-27.
Income from the transfer of a Virtual Digital Asset — cryptocurrencies, NFTs and similar — is taxed under Section 115BBH at a flat 30% (plus applicable surcharge and cess). This rate applies regardless of your income slab and regardless of how long you held the asset. There is no "long-term" concession for crypto.
Crucially, the only deduction allowed is the cost of acquisition. You cannot deduct exchange fees, internet costs, or any other expense against your crypto gains.
This is the one that catches traders out. A loss from one VDA cannot be set off against the gain from another VDA — or against any other income. Each transaction's gain is taxed; the losses are simply ignored for set-off, and they cannot be carried forward either.
In practice that means if you made ₹1 lakh on one coin and lost ₹80,000 on another, you are taxed on the full ₹1 lakh gain at 30% — the loss gives you nothing. This is very different from how equity or property losses work, and it's why "I broke even overall" is rarely the tax position people assume.
Under Section 194S, a 1% TDS is deducted on the transfer of VDAs above the specified threshold. If you traded on an Indian exchange, this was usually deducted automatically — and it shows up in your AIS and Form 26AS. It's not an extra tax; it's a credit you claim against your 30% liability when you file. If TDS was deducted and you don't file, you simply lose that credit.
Crypto income is reported in a dedicated Schedule VDA in the return, which requires transaction-level detail — date of acquisition, date of transfer, cost, and consideration. Because of this, crypto traders generally cannot use the simplest forms; the return must accommodate Schedule VDA.
What is the tax rate on crypto in India? A flat 30% under Section 115BBH (plus surcharge and cess), regardless of slab or holding period. Only the cost of acquisition is deductible.
Can I set off my crypto losses? No. A VDA loss cannot be set off against another VDA gain or any other income, and it cannot be carried forward.
What is the 1% TDS on crypto? A 1% TDS under Section 194S on VDA transfers above the threshold, usually deducted by the exchange. It appears in your AIS/26AS and is credited against your 30% tax.
Where is crypto reported in the ITR? In Schedule VDA, with transaction-level detail. This means a simple ITR-1 won't do.
Crypto is the rare area where the rules are strict and the reporting is automatic. The exchanges feed your trades into your AIS, so the safe approach is full, accurate disclosure in Schedule VDA — with the 1% TDS properly credited.
Let RDA file your crypto return — we compute your VDA gains correctly, claim your TDS credit, and file Schedule VDA so it matches what the department already sees.
Written by CA Rahul Dang, Founder & Practice Lead, RDA Tax Advisory Services Pvt Ltd, Baner, Pune.
Part of the Capital Gains knowledge hub.
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