India taxes crypto under its rules for virtual digital assets (VDAs). The rules are strict and simple: a flat 30% on gains, almost no deductions, and no relief for losses. The 2026 Budget left the rates unchanged but tightened reporting, so records matter more than ever.
What counts as a virtual digital asset
Cryptocurrencies such as Bitcoin, Ether and stablecoins like USDT, as well as most tokens and NFTs. From 1 April 2026 the definition explicitly covers any crypto-asset recorded on a cryptographically secured distributed ledger. Gift cards, loyalty points and NFTs that represent ownership of a physical asset are excluded.
The 30% rule
- Gains on transferring crypto are taxed at 30%, plus 4% cess, regardless of your income slab. Surcharge also applies at high incomes.
- The only deduction is what you paid to acquire the crypto. Exchange fees, internet costs or interest can't be deducted.
- A loss can't be set off against any other gain or income, not even a gain on another coin, and it can't be carried forward.
- Selling for rupees, swapping one coin for another, and spending crypto on goods or services all count as transfers.
Example
You buy Bitcoin for ₹5 lakh and sell it for ₹6 lakh: the gain is ₹1 lakh and the tax is ₹31,200 (30% plus 4% cess). In the same year you sell Ether at a ₹1 lakh loss. Your tax is still ₹31,200, because the loss can't reduce it.
1% TDS on sales
When you sell crypto, 1% of the sale value is deducted as tax at source, usually by the Indian exchange, above small annual thresholds. This isn't an extra tax: it appears in your Annual Information Statement (AIS) and Form 26AS, and counts towards the tax you owe. Keep your exchange's TDS statements.
If a client pays you in crypto
This is where many freelancers get caught out, because two taxes can apply:
- When you receive it: the rupee value of the crypto on that day is professional income, taxed exactly like a payment in dollars. With presumptive taxation, it is part of the gross receipts of which 50% is taxed.
- When you sell or swap it later: any rise above that rupee value is a crypto gain, taxed at 30%. The value on the day you received it becomes your cost.
For example, a client pays you 1,000 USDT when 1 USDT is worth ₹95. That is ₹95,000 of work income. You sell it a month later for ₹96,200: the extra ₹1,200 is taxed at 30%, and the exchange deducts 1% TDS on the ₹96,200.
A caution for exporters. Payment for exported services is normally expected to arrive in foreign currency through a bank, backed by a FIRA, within the RBI's deadline. Crypto payments have no FIRA and may not qualify as a zero-rated export for GST. The rules here are unsettled, so speak to a chartered accountant before accepting regular payments in crypto.
Advance tax applies to crypto too
Tax on crypto gains is part of your advance tax. If your total tax for the year, after TDS, is ₹10,000 or more, pay it by the usual instalment dates, or in one go by 15 March if you use presumptive taxation for your freelance income.
Reporting is getting tighter
- Every sale or swap goes in Schedule VDA of your return: date acquired, date transferred, cost and sale value, with losses entered as nil.
- From Tax Year 2026-27, exchanges must report transactions to the tax department, with penalties for late or wrong reports.
- India plans to adopt the international crypto reporting framework (CARF) by 2027, so information from foreign exchanges will also be shared.
- Undisclosed income can attract penalties of 50% to 200% of the tax on it, on top of the tax itself.
Keeping records the easy way
DollarDesk has a free crypto tracker: log payments received in crypto and anything you bought, sold or swapped. It looks up the rupee price for the day, matches costs first-in first-out, applies the 30% rule without loss set-off and tracks TDS. Pro adds unlimited entries, crypto in your advance tax plan, and a ready-made file for Schedule VDA.