The crypto tax india 2026 framework is still widely misunderstood—even by people who actively trade. Many assume small trades don’t matter, losses can be adjusted freely, or that TDS means tax is “already paid.” All three assumptions are wrong. In 2026, crypto taxation in India is strict, mechanical, and unforgiving of casual errors.
This guide strips away confusion and explains how crypto tax actually works, how to report it correctly in your ITR, and which mistakes quietly trigger notices or excess tax.
What Counts as Crypto Under Indian Tax Rules
Under Indian law, crypto falls under the category of Virtual Digital Assets (VDA).
VDAs include:
• Cryptocurrencies (Bitcoin, Ethereum, etc.)
• Tokens and utility coins
• NFTs and similar digital assets
If it’s digitally created, tradable, and has value, it’s likely covered under crypto tax india 2026 rules.
Flat 30% Tax: What It Really Means
Crypto gains are taxed at a flat rate.
Key points:
• 30% tax on profits
• No slab benefit
• No basic exemption usage
This applies regardless of your income level. A ₹1,000 profit and a ₹10 lakh profit are taxed the same way—percentage-wise.
The 1% TDS Rule Explained Simply
The most misunderstood part of crypto taxation is TDS.
How 1% TDS works:
• Deducted on every sale transaction
• Applied on gross value, not profit
• Credited to your PAN
TDS is not final tax. It’s just advance collection.
Many traders lose liquidity because frequent TDS deductions reduce usable capital.
Can You Set Off Crypto Losses
This is where most mistakes happen.
Loss rules:
• Losses cannot be set off against any other income
• Losses cannot be carried forward
• Only profits from VDAs are taxable
In simple terms, losses disappear for tax purposes—but profits don’t.
ITR Reporting: Where People Go Wrong
Crypto income must be declared correctly—even if TDS is already deducted.
You must:
• Report gross sale value
• Declare profits under VDA section
• Claim TDS credit properly
Skipping reporting because “exchange deducted TDS” is one of the fastest ways to get flagged.
Which ITR Form Should You Use
The correct form depends on your income profile.
General guidance:
• Salaried investors → appropriate ITR with VDA schedule
• Traders with frequent activity → detailed reporting required
Always check that the VDA section is filled—many people forget this step.
How to Calculate Crypto Profit Correctly
Profit calculation is transaction-based.
Formula:
• Sale value – purchase cost = taxable profit
You cannot add:
• Transaction fees
• Internet or platform costs
• Mining expenses
Only direct acquisition cost is allowed.
Crypto-to-Crypto Trades: Are They Taxable
Yes. This is a common blind spot.
If you swap:
• Crypto A → Crypto B
It is treated as:
• Sale of Crypto A (taxable event)
• Purchase of Crypto B (new cost base)
Ignoring this breaks crypto tax india 2026 compliance completely.
NFT Taxation: Same Rules, Same Pain
NFTs are taxed under the same VDA framework.
That means:
• 30% tax on gains
• 1% TDS on sale
• No loss adjustment
Creative income and resale gains are treated differently—mixing them causes errors.
Record-Keeping: Your Only Protection
If you don’t track transactions, you can’t defend numbers.
You should maintain:
• Trade dates and amounts
• Buy and sell prices
• TDS deducted proof
• Exchange statements
Poor records are the main reason people overpay tax.
Common Crypto Tax Mistakes That Cost Money
Avoid these at all costs:
• Not reporting crypto income
• Assuming losses reduce tax
• Ignoring crypto-to-crypto trades
• Forgetting to claim TDS credit
Tax mistakes don’t always trigger penalties—but they always cost money.
Should You Continue Crypto Trading in 2026
Crypto trading is still legal—but tax-inefficient for frequent churn.
Better approach:
• Trade less frequently
• Track every transaction
• Factor tax before profit targets
In crypto tax india 2026, strategy matters as much as returns.
Conclusion
The crypto tax india 2026 system is clear but harsh. Flat tax, no loss relief, mandatory TDS, and strict reporting leave little room for casual mistakes. If you trade without understanding the rules, you’ll overpay or get flagged. If you track carefully and report honestly, compliance is straightforward—even if taxes are high.
In crypto, ignoring tax doesn’t make it disappear. It makes it expensive.
FAQs
Is crypto taxed at slab rates in India?
No. Crypto gains are taxed at a flat 30%.
Is 1% TDS final tax?
No. It’s only advance collection.
Can crypto losses be adjusted against salary income?
No. Losses cannot be set off or carried forward.
Do I need to report crypto if TDS is deducted?
Yes. Reporting is mandatory.
Are crypto-to-crypto trades taxable?
Yes. Each swap is a taxable event.