India crypto tax: 30% tax and 1% TDS explained

1. 30% flat tax on income from transferring VDAs (old Act section 115BBH, from April 1, 2022). Your income slab does not matter.
2. Only cost of acquisition can be deducted. No deduction for fees, internet or other expenses.
3. No loss set-off: a loss on one VDA cannot reduce a gain on another or any other income, and cannot be carried forward.
4. 1% TDS on payment for a VDA transfer (old section 194S), above thresholds. Indian exchanges usually deduct it; it shows in your Form 26AS/AIS and counts toward your tax.
5. Gifts of VDAs can be taxable for the receiver above limits, except from relatives.

The Income-tax Act, 2025 replaces the 1961 Act from April 1, 2026, and section numbers change. Check the new section references on the Income Tax Department site before filing.

Since March 2023, VDA service providers fall under India’s anti-money-laundering law (PMLA) and must register with the Financial Intelligence Unit (FIU-IND). Offshore exchanges that serve Indian users without registering have faced action. Using a registered exchange keeps TDS records clean.

The digital rupee (e₹) is RBI money, not a VDA.

You buy a VDA for ₹10,000 and later sell for ₹14,000. Gain = ₹4,000. Tax at 30% = ₹1,200, plus surcharge and 4% cess. 1% TDS of ₹140 was deducted at sale and is credited against that tax. A ₹3,000 loss on another coin cannot be used to reduce the ₹4,000.