Crypto Tax in India: 30 Percent Under 115BBH and 1 Percent TDS

If you sold Bitcoin, Ethereum or any token in India and made a profit, you owe a flat 30 percent tax on that gain under Section 115BBH of the Income Tax Act, plus a 1 percent TDS already cut from the sale under Section 194S. There is no slab, no basic exemption, and almost no deduction. This guide walks through exactly what you pay, what you can claim, and how to file it.

A Virtual Digital Asset (VDA) is defined in Section 2(47A) of the Income Tax Act. In plain terms it covers any cryptographically generated code, number or token that is not Indian or foreign currency. Cryptocurrencies like Bitcoin, Ethereum and Solana, stablecoins, exchange tokens and Non-Fungible Tokens (NFTs) all fall inside this definition. If you hold or trade any of these, the VDA tax rules apply to you.

The whole crypto tax regime sits in two sections inserted by the Finance Act, 2022.

Section 115BBH (the 30 percent rate). Any income from the transfer of a VDA is taxed at a flat 30 percent, plus applicable surcharge and a 4 percent Health and Education Cess. The rate does not change with your income slab. A salaried person in the 5 percent bracket and a high earner in the top bracket both pay the same 30 percent on crypto gains. This section applies to income from the financial year 2022-23 onward, that is the year beginning 1 April 2022 (Assessment Year 2023-24).

Section 194S (the 1 percent TDS). The buyer or the exchange must deduct 1 percent TDS on the consideration paid for transferring a VDA. This is effective from 1 July 2022. The TDS is not an extra tax. It is an advance that shows up in your Form 26AS and Annual Information Statement (AIS), and you adjust it against your final tax when you file.

Three rules trip up most people, so read them carefully.

• Only the cost of acquisition is deductible. You can subtract what you paid to buy the asset. You cannot deduct exchange fees, brokerage, transfer charges, internet or mining infrastructure costs, or any other expense.
• No set off of losses. A loss on one crypto cannot be adjusted against the gain on another crypto, and it cannot be set off against salary, business income or any other head.
• No carry forward. A VDA loss cannot be carried forward to future years. It simply lapses.

The 30 percent under 115BBH is a special rate. It applies whether you are on the old tax regime or the new tax regime. Choosing a regime changes your slab tax on salary and other income, but it does not touch the flat 30 percent on crypto.

A separate point on gifts. If you receive a VDA as a gift, that is not taxed under 115BBH. It is taxed in your hands as income from other sources under Section 56(2)(x), at your normal slab rate, if the value from non-relatives crosses ₹50,000 in the year. Gifts from defined relatives stay exempt. The 30 percent only bites later, when you yourself transfer that gifted VDA.

TDS under 194S is not deducted on every tiny trade. The threshold depends on who the buyer is.

• If the buyer is a specified person, TDS applies once the value paid to a seller crosses ₹50,000 in a financial year.
• For everyone else, TDS applies once the value crosses ₹10,000 in a financial year.

A specified person is an individual or Hindu Undivided Family (HUF) whose business turnover does not exceed ₹1 crore, or whose professional receipts do not exceed ₹50 lakh, in the previous year, and also an individual or HUF with no income at all under the head profits and gains of business or profession. In practice, most retail investors buying through an Indian exchange fall under the ₹50,000 line, and the exchange handles the deduction.

The mechanics were set out by the Central Board of Direct Taxes in Circular No. 13/2022 dated 22 June 2022 and Circular No. 14/2022 dated 28 June 2022, which cover trades through an exchange and peer-to-peer transfers.

1. List every VDA you sold, swapped or spent during the financial year. A swap of one coin for another is also a transfer.
2. For each sale, take the sale consideration and subtract only the cost of acquisition. The difference is your taxable gain.
3. Add up all the gains. Apply 30 percent, then add the 4 percent cess and any surcharge.
4. Pull your Form 26AS and AIS to see the 1 percent TDS already deducted under 194S during the year.
5. Open ITR-2 if you have no business income, or ITR-3 if crypto is your business or you have business income.
6. Fill Schedule VDA with each transaction: date of acquisition, date of transfer, cost of acquisition, sale consideration and the resulting income.
7. Claim the 194S TDS credit so it reduces your final tax payable, and pay any balance as self-assessment tax before filing.

• Exchange transaction statement or trade history for the full financial year
• Wallet records for any off-exchange or peer-to-peer transfers
• Proof of cost of acquisition for each asset
• Form 26AS and AIS showing 194S TDS credit
• Bank statements matching deposits and withdrawals

• Treating crypto gains as normal capital gains and claiming indexation or expenses. Under 115BBH only the cost of acquisition is allowed.
• Setting off a loss on one coin against a profit on another. The law forbids it.
• Assuming the new tax regime lowers the crypto rate. The flat 30 percent stands under both regimes.
• Forgetting to claim the 194S TDS credit, and paying the same tax twice.
• Skipping Schedule VDA. The AIS already flags your trades, so a mismatch invites a notice.

Karan Mehta, a software engineer in Surat, bought Ethereum for ₹2,00,000 in May 2023 and sold it for ₹3,50,000 in February 2024.

• Sale consideration: ₹3,50,000
• Cost of acquisition: ₹2,00,000
• Taxable gain: ₹1,50,000
• Tax at 30 percent: ₹45,000
• Add 4 percent cess: ₹1,800
• Total tax: ₹46,800

The exchange had already deducted 1 percent TDS of ₹3,500 under Section 194S at the time of sale, visible in Karan's AIS. He claims that ₹3,500 as credit and pays the remaining ₹43,300 as self-assessment tax. His ₹40,000 loss on a separate memecoin the same year gives him no relief, because VDA losses cannot be set off.

The Right to Information Act, 2005 can help if a tax or TDS grievance stalls. If your 194S TDS credit is missing from Form 26AS and the deductor will not respond, an RTI to the relevant income tax office can ask for the status of TDS deposited against your PAN. You can also use RTI to seek the current government policy or circulars on VDA taxation from the Central Board of Direct Taxes. Draft a clean application with the AI RTI Drafter, and if the Public Information Officer ignores you or gives a vague reply, escalate with the First Appeal Builder. You can sanity-check any PIO response against the law using the PIO Reply Checker. For a full walkthrough of filing and appeals, see The RTI Playbook.

Income from transfer of a Virtual Digital Asset is taxed at a flat 30 percent under Section 115BBH, plus applicable surcharge and a 4 percent cess. The rate is the same regardless of your income slab.

No. Under Section 115BBH the only deduction allowed is the cost of acquisition. Exchange fees, brokerage, internet charges and mining infrastructure costs cannot be claimed.

No. A loss from transferring a VDA cannot be set off against another VDA, against any other head of income, and it cannot be carried forward to future years.

The buyer or exchange deducts 1 percent of the sale value as TDS when you transfer a VDA, effective from 1 July 2022. It is an advance tax, shown in your Form 26AS and AIS, which you adjust against your final tax.

TDS applies once the consideration crosses ₹50,000 in a financial year if the buyer is a specified person, and ₹10,000 in a financial year for other buyers.

You report every VDA transaction in Schedule VDA of your ITR. Use ITR-2 if you have no business income, or ITR-3 if you do. Schedule VDA was introduced from Assessment Year 2023-24.

No. The 30 percent under Section 115BBH is a special rate. It applies the same way whether you choose the old regime or the new regime for your other income.

Yes. A VDA received as a gift is taxed in the recipient's hands as income from other sources under Section 56(2)(x) at slab rates, if its value from non-relatives exceeds ₹50,000 in the year. Gifts from defined relatives are exempt.

• Section 115BBH, Income Tax Act, 1961 (incometaxindia.gov.in)
• Section 194S, Income Tax Act, 1961 (incometaxindia.gov.in)
• Section 2(47A), definition of Virtual Digital Asset, Income Tax Act, 1961
• CBDT Circular No. 13/2022 dated 22 June 2022 and Circular No. 14/2022 dated 28 June 2022
• Schedule VDA, ITR forms (incometaxindia.gov.in)
• RTI Act, 2005

Reviewed by Dr. Shrawan Kumar Pathak.