Bitcoin Tax in India

As of early 2026, India’s tax regime for Bitcoin and other cryptocurrencies—officially termed Virtual Digital Assets (VDAs)—remains one of most strict in world. Despite persistent lobbying from industry for more lenient terms in latest Union Budget, core pillars of 2022 framework remain firmly in place.

Here is a comprehensive guide to how Bitcoin is taxed in India for current assessment year.

1. 30% Flat Tax Rule

Any income generated from transfer of Bitcoin or other VDAs is taxed at a flat rate of 30%.

• No Income Slab Benefits: This rate applies regardless of your total annual income. Even if you fall in the 5% or 10% income tax bracket, your crypto gains are still taxed at 30%.

• Effective Rate: When you add 4% Health and Education Cess, effective tax rate becomes 31.2%. For high-net-worth individuals subject to surcharges, this can climb even higher.

• No Holding Period Distinction: Unlike stocks, there is no “Long-Term Capital Gains” (LTCG) benefit. Whether you sell your Bitcoin after 2 days or 2 years, the rate remains the same.

2. 1% TDS (Tax Deducted at Source)

To track movement of digital assets, government mandates a 1% TDS on sale or transfer of crypto.

• Who Deducts It? If you use a compliant Indian exchange, they deduct this automatically. If you use a P2P (Peer-to-Peer) platform or an international exchange, responsibility to deposit this tax falls on buyer.

• Thresholds: TDS is applicable if total transaction value exceeds:

  • ₹50,000 in a financial year for Specified Persons (individuals/HUFs not required to have their accounts audited).

  • ₹10,000 for all other taxpayers.

• It’s Not an Extra Tax: The 1% TDS is a pre-paid tax. You can claim it as a credit against your final 30% tax liability when filing your Income Tax Return (ITR).

3. Strict Rules on Deductions and Losses

Indian tax code is particularly rigid regarding what you can claim as an expense:

• Only Cost of Acquisition: The only deduction allowed is actual price you paid to buy Bitcoin. You cannot deduct exchange fees, gas fees, electricity costs (for mining), or internet charges.

• No Offsetting Losses: This is the most controversial rule. You cannot offset a loss in one coin (e.g., Ethereum) against a gain in another (e.g., Bitcoin).

  Example: If you make a profit of ₹1,00,000 on Bitcoin but lose ₹50,000 on Ethereum, you still pay 30% tax on the full ₹1,00,000.

• No Carry Forward: Losses cannot be carried forward to future years to reduce future tax bills.

4. Taxation on Mining, Airdrops, and Gifts

Transaction Type	Tax Treatment
Mining/Airdrops	Taxed as Income from Other Sources based on market value at the time of receipt. If sold later, a 30% tax applies to any further appreciation.
Gifting	Recipient is taxed at 30% if value exceeds ₹50,000, unless received from relatives as defined by IT Act.
Crypto-to-Crypto	Swapping Bitcoin for another coin (e.g., BTC to USDT) is considered a transfer and triggers 30% tax on any realized gains.

5. Compliance and Reporting (Schedule VDA)

Starting with the 2025-26 fiscal cycle, reporting has become more granular. Taxpayers must use Schedule VDA in their ITR forms (usually ITR-2 or ITR-3). You are required to list:

1. Date of Acquisition and Date of Transfer.

2. Cost of Acquisition.

3. Consideration Received (Sale Price).

4. Resulting Profit (Losses are ignored).

Recent 2026 Update:

Government has introduced stricter penalties for non-disclosure. Failure to report VDA transactions or providing inaccurate information can now lead to heavy fines and, in extreme cases of tax evasion, scrutiny of digital records including social media and exchange private messages.