India crypto tax in 2026: VDA computation, TDS and Schedule VDA
India does not tax virtual digital assets by applying 30 percent to one annual exchange profit. For financial year 2025-26, Section 115BBH taxes positive income from each VDA transfer at 30 percent, plus applicable surcharge and 4 percent health and education cess. Only cost of acquisition is allowed in that special computation; losses cannot be set off or carried forward. Section 194S TDS is a separate credit and compliance mechanism based on consideration, not the final tax. The return for assessment year 2026-27 therefore needs transaction-level Schedule VDA data and a reconciliation to TDS records.
Start with the financial year and assessment year
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Start for free →“India crypto tax 2026” can refer to two different periods. Financial year 2025-26 runs from 1 April 2025 to 31 March 2026 and is filed as assessment year 2026-27. The Income Tax Department confirms that AY 2026-27 remains under the Income-tax Act, 1961, so the familiar references are Sections 115BBH and 194S.
The Income-tax Act, 2025 applies from 1 April 2026. Its structure renumbers the corresponding provisions: the official section navigator maps the special tax on VDA income to section 194, table serial number 4, and the Department's Form 142 guidance maps old Section 194S withholding to section 393(1), table serial number 8(vi). A report must label the period correctly instead of mixing a 2025-26 transaction with the new numbering.
| Transaction period | Return period | VDA income rule | VDA TDS reference |
|---|---|---|---|
| 1 Apr 2025–31 Mar 2026 | AY 2026-27 | 1961 Act, Section 115BBH | 1961 Act, Section 194S |
| From 1 Apr 2026 | Tax year under the 2025 Act | 2025 Act, section 194 table item for VDA income | 2025 Act, section 393(1) table item for VDA transfers |
The core concepts continue, but forms, utilities and procedural references must be taken from the release for the relevant return year. Do not use a blog's filing date without checking the current portal and the taxpayer's audit status.
How the 30% VDA computation actually works
Section 115BBH applies a 30% rate to income from the transfer of a virtual digital asset. Applicable surcharge and 4% health and education cess can increase the final amount. The base is not gross sales and it is not the exchange's net P&L. For each transfer, the workpaper determines consideration minus permitted cost of acquisition.
The special restriction allows no deduction for expenditure or allowance other than cost of acquisition. Trading fees, platform subscriptions, interest and general expenses should therefore not be silently subtracted inside the Section 115BBH calculation merely because they are economically related. A business may need a wider accounting schedule, but that does not override the special VDA computation.
Loss treatment is unusually strict. A loss from a VDA transfer cannot be set off against income under another provision and cannot be carried forward. The notified Schedule VDA asks for transaction details and, for the income column, nil where the transaction produces a loss. This means profitable transfers are added while losing transfers do not reduce that special-rate total.
| Example transfer | Consideration | Cost of acquisition | Schedule VDA income |
|---|---|---|---|
| Sell token A | INR 150,000 | INR 100,000 | INR 50,000 |
| Swap token B | INR 80,000 | INR 110,000 | Nil; INR 30,000 loss does not offset token A |
| Special-rate base | Positive transfer income only | INR 50,000 | |
The simplified tax on INR 50,000 is INR 15,000 before surcharge and cess. The example does not calculate the person's final return, rebates or other tax. The detailed India Schedule VDA guide explains the report mapping.
The 1% TDS is not a 1% crypto tax
VDA withholding applies to consideration in covered transfers. Under old Section 194S, the buyer or an exchange operating under the CBDT guidelines may deduct 1% subject to the statutory conditions and thresholds. In an exchange transaction, crypto-to-crypto trade or consideration in kind, the operational rules decide who deposits and reports the amount. From April 2026 the corresponding provision is presented under the new Act's section 393(1) table.
TDS is not calculated on gain. If an asset bought for INR 100,000 is sold for INR 90,000, withholding can still arise on consideration even though the transfer produces no positive Section 115BBH income. Conversely, the final special-rate liability can exceed the TDS credit. Reconcile:
- exchange TDS statement and transaction ID;
- Form 26AS and Annual Information Statement entries;
- gross consideration, including in-kind value;
- deductor identity, PAN and certificate where applicable;
- credit actually available for the correct taxpayer and year.
A tax report should display TDS as a separate reconciliation or potential credit. It must not deduct 1% from the gain, treat it as an acquisition fee, or assume that every imported exchange line proves a credit accepted on the return.
Sales, swaps, spending and other VDA events
The VDA definition covers specified digital representations of value and NFTs, subject to notified inclusions and exclusions. A “transfer” is broad. The transaction engine should review the following events:
- sale of a VDA for INR or another fiat currency;
- exchange of one VDA for another VDA;
- spending a VDA for goods or services;
- gift or transfer where the transfer and receipt provisions require review;
- disposal of an NFT or another covered token;
- redemption, settlement or extinguishment of a token right.
Buying a VDA with fiat and moving the same beneficially owned asset between personal wallets normally does not itself create transfer income, but both events are essential to prove acquisition cost and ownership. A bridge, wrapper, liquidity token or lending receipt can create a new legal or economic right; a protocol label alone cannot decide whether it was only a transfer.
Mining, staking, salary tokens, airdrops and gifts can also create income on receipt under provisions outside the transfer calculation. When that asset is later transferred, its permitted cost must be supported under the applicable rule. Do not count the same receipt as both fresh income and sale proceeds, and do not assume that every reward has zero basis.
Cost of acquisition and lot identification
Schedule VDA needs a date of acquisition and a cost for each transfer. The law's special deduction rule does not itself announce a universal FIFO election for every kind of VDA. Software may use FIFO as a consistent economic lot-identification method where individual units cannot be specifically traced, but it should describe that as its documented calculation convention rather than a statutory India-wide pooling rule.
Specific transaction IDs, wallet movements and exchange order records provide stronger evidence than a convenient annual average. Own-wallet transfers must preserve the original lot history. Missing basis cannot safely be converted to zero without disclosure: that may overstate income, conceal an import defect and make the Schedule VDA acquisition date false. Mark the line not computable, reconcile the transfer and regenerate the report.
Costs should be recorded in INR at the transaction time with a reproducible conversion source. Stablecoins are not automatically INR. Where the exchange reports only a pair such as BTC/USDT, preserve the token quantity, pair price and the INR valuation path used for consideration and acquisition cost.
Schedule VDA, ITR-2 and ITR-3
The notified AY 2026-27 forms require transaction-wise Schedule VDA details. For an investor without business or professional income, ITR-2 may be the relevant form. Where VDA income belongs to business or profession, ITR-3 and its business schedules can be required. The form choice depends on the whole return, not only crypto.
A defensible Schedule VDA export contains:
| Field | Report evidence |
|---|---|
| Date of acquisition | Matched purchase, receipt or supported opening balance |
| Date of transfer | Executed sale, swap or settlement timestamp |
| Head of income | Capital gain or business classification based on the taxpayer's facts |
| Cost of acquisition | Supported cost allowed by the VDA rule |
| Consideration | INR market value of cash, token or property received |
| Income | Positive difference; nil for a losing transfer under the notified schedule |
The report must also reconcile Schedule VDA totals to the relevant Capital Gains or Business/Profession schedules and the special-rate computation. A CSV with one net line does not satisfy transaction-level disclosure.
Futures, perpetuals and funding need contract classification
A crypto exchange's futures product is not automatically a transfer of a VDA. Some contracts settle only a price difference; others deliver or transfer a token. The report therefore asks for the actual contract or broker classification. Realised close_long and close_short P&L, funding and fees should be documented separately from spot Schedule VDA disposals.
Opening trades and position snapshots are evidence, not realised taxable P&L. If opening time, entry price or opening fee is absent, software may reconstruct it from a matched opening transaction. That reconstruction must be labelled and must not create a second profit. Where the contract cannot be established, the amount belongs in a review worksheet rather than being forced into Schedule VDA or omitted as tax-free.
India crypto filing checklist
- Select the correct financial year and assessment year.
- Import every exchange and wallet, including opening history.
- Separate own-wallet transfers from disposals.
- Value each sale and swap in INR at the event time.
- Match acquisition date and supported cost to every transfer.
- Compute positive transfer income transaction by transaction.
- Keep losing transfers visible without netting them into the special-rate base.
- Reconcile 1% TDS to Form 26AS, AIS and exchange records.
- Separate rewards, gifts, business activity and derivatives.
- Choose ITR-2 or ITR-3 from the taxpayer's complete income profile.
- Resolve missing basis or valuation before filing.
- Retain raw CSVs, wallet proof, INR rates and the submitted report version.
CoinTaxReporting can prepare the VDA transaction workpaper and highlight missing information. It does not determine residence, validate TDS credit with the department or complete unrelated return schedules. See the global crypto reporting guide for information-reporting changes and the calculator methodology guide for why transaction data must precede a tax estimate.
Frequently asked questions
Is India crypto tax exactly 30%?
The special rate on positive VDA transfer income is 30%, but applicable surcharge and 4% health and education cess can increase the amount. Final liability also depends on the complete return.
Can one crypto loss offset another crypto gain?
No under the special VDA rule. Schedule VDA reports positive transfer income transaction by transaction and a losing transfer does not reduce another VDA gain.
Is 1% TDS the final crypto tax?
No. TDS is withholding on consideration and a potential return credit. Section 115BBH income is a separate computation.
Does every Indian crypto investor use FIFO?
The special VDA provision does not itself prescribe one universal FIFO pool. A report can use a documented and consistent lot-identification convention, but must not mislabel it as an express statutory election.
Which law applies to AY 2026-27?
The Income Tax Department states that AY 2026-27 remains under the Income-tax Act, 1961. The new Act and its renumbered provisions apply from 1 April 2026.
Official Indian sources
- Income Tax Department: Section 115BBH
- Income Tax Department: ITR-2 and VDA FAQ
- CBDT Notification 46/2026: AY 2026-27 ITR-2 and Schedule VDA
- CBDT: ITR-3 validation rules for AY 2026-27
- Income Tax Department: old-to-new Act section navigator
- Income Tax Department: Form 142 and VDA TDS under the 2025 Act
Official-source review completed 1 September 2026. Use the notified utility and instructions for the applicable assessment year; this guide is not individual tax advice.
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Start for free →Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.