Cryptocurrency in India: regulation, taxes and reporting
In short. India lets you own crypto and taxes it harder than almost anywhere. Gains carry a flat 30% plus cess, whatever your income bracket and however long you held. You may deduct what you paid for the coin and nothing else, and a loss on one trade cannot cover a gain on another. Every sale also sheds 1% at source. Since April 2026 your exchange reports each of your transactions to the tax department.
- TAX ON GAINS
- 30%flat, plus 4% cess and surcharge
- LOSSES
- No offsetnot against gains, not carried forward
- DEDUCTED AT SOURCE
- 1%on each transfer, credited back later
- WHAT YOU MAY DEDUCT
- Purchase priceexchange fees do not count
- PLATFORM REPORTING
- Since April 2026user-level data to the tax office
- LEGAL TENDER
- Nolawful to hold, not to pay with
Legal to hold, punishing to trade
Nobody in India has banned crypto. The Reserve Bank tried to cut banks off from it in 2018, the Supreme Court struck that down in March 2020, and since then you have been free to buy and sell.
Parliament answered through the tax code instead. In the Finance Act of 2022 the legislators created a category called the virtual digital asset and built a regime around it that discourages trading without forbidding it, and no government since has softened those rates.
The 30% and what it ignores
Section 115BBH charges a flat 30% on the gain from transferring a virtual digital asset, with a 4% health and education cess on top and a surcharge if your income reaches the thresholds.
The headline rate understates it. Your income bracket changes nothing, so a student on a low salary pays what a fund manager pays, and the holding period changes nothing either, which strips away the long-term relief Indian equities enjoy. You may subtract the cost of acquiring the coin and stop there, leaving exchange fees, transfer charges and interest on borrowed money outside the sum.
Losses stay where they fall
Lose money on ether and make it on bitcoin in the same year, and you still pay 30% on the bitcoin.
Section 115BBH blocks the set-off. Your loss on one virtual digital asset reduces neither a gain on another nor your salary, and it expires with the year rather than carrying forward. Traders running dozens of positions pay on their winners while their losers do nothing for them, and that arithmetic pushed many Indian traders to offshore venues.
The 1% that follows every sale
Section 194S takes 1% out of the payment whenever a virtual digital asset changes hands, from 1 July 2022.
The threshold sits at 50,000 rupees a year for specified persons and 10,000 for everyone else, which in practice catches almost anyone who trades. You get the money back as credit when you file, so it works as a prepayment. The tax department gains something else from it: every deduction leaves a record carrying your name.
April 2026 changed the reporting
Parliament replaced the 1961 income tax law with the Income-tax Act of 2025, and one of its clauses landed on crypto.
Section 509 obliges every entity handling virtual digital assets for Indian users to file user-level transaction data with the tax department, in force since 1 April 2026. Section 446 sets the penalties: 200 rupees for each day a statement is late, and 50,000 rupees for inaccurate information left uncorrected. The same Act widened the definition of a virtual digital asset to cover anything resting on cryptographic security and a distributed ledger.
India also sits among the jurisdictions preparing to exchange crypto account data internationally, with adoption pencilled in for 2027.
Who supervises the platforms
The Financial Intelligence Unit treats every virtual digital asset service provider as a reporting entity under the anti-money-laundering law, which means registration, know-your-customer checks and record-keeping on the same footing as a bank.
Where you keep your office changes nothing, since the obligation attaches to the activity. An offshore exchange serving Indian users falls under it with no presence in the country, and the unit has enforced that reading: it issued notices to 25 offshore providers in October 2025 and blocking orders against unregistered ones in March 2026. Its annual report for 2024-25 counted 49 registered providers, 45 of them Indian.
What this means if you are moving there
You keep the right to hold and trade, and you give up most of what makes active trading worthwhile.
Long-term holders feel the regime least, since 30% on a single eventual sale is a known cost. Anyone rebalancing often runs into the arithmetic that losses cost them twice. Plan for the paperwork too: with platform reporting live since April 2026, the tax department sees your trades whether you report them or not.
Allowed
- Buy, hold and sell crypto through registered platforms
- Receive crypto as payment, declaring it as income
- Mine, with the proceeds taxed on the same terms
- Claim credit for the 1% withheld at source when you file
Restricted
- Offsetting a loss on one coin against a gain on another, or carrying it forward
- Deducting exchange fees, transfer costs or interest on borrowed money
- Using an offshore platform that has not registered with the Financial Intelligence Unit
- Paying for goods in crypto, which is not legal tender in India
How the rules took shape
The Supreme Court overturns the Reserve Bank's ban on banks serving crypto businesses.
Section 115BBH takes effect: 30% on gains, with no set-off for losses.
Section 194S starts deducting 1% at source on every transfer.
Virtual digital asset providers become reporting entities under the anti-money-laundering law.
Section 509 obliges platforms to file user-level transaction data with the tax department.
Worth knowing
On 18 July 2024 the WazirX exchange lost $230 million in a hack — the largest theft in the country's history. The trail led to North Korea's Lazarus Group.
Common questions
Is crypto legal in India?
Owning and trading it is legal. The Reserve Bank's 2018 banking ban fell in the Supreme Court in March 2020, and no ban has replaced it. Crypto is not legal tender, so you cannot demand that a shop accept it.
Do I pay 30% even on a small profit?
Yes. The rate is flat and ignores both your income bracket and how long you held the asset, and a 4% cess applies on top.
Can I use my losses?
No. A loss on one virtual digital asset offsets neither a gain on another nor any other income, and it expires with the tax year instead of carrying forward.
What is the 1% deducted from my sale?
Tax deducted at source under Section 194S. It is a prepayment, not an additional charge, and you claim credit for it when filing. Thresholds are 50,000 rupees a year for specified persons and 10,000 for others.
Does my exchange report me?
Since 1 April 2026, yes. Section 509 requires every platform serving Indian users to file user-level transaction data, with penalties of 200 rupees a day for late statements.
Sources
Related reading
Other countries
Updated 20.08.2026 · this is reference material, not investment or tax advice