Crypto Tax in India: 2026 Overview
India has one of the harshest crypto tax regimes globally. Since 2022, all crypto gains are taxed at a flat 30% rate with no deductions allowed except cost of acquisition. Additionally, a 1% TDS (Tax Deducted at Source) applies to all crypto transactions.
Tax Rates
| Category | Rate | Deductions | Notes |
|---|---|---|---|
| {'text': 'Capital gains (any duration)', 'highlight': True} | 30% | Cost of acquisition only | No distinction between short and long term |
| {'text': 'TDS on transactions', 'highlight': True} | 1% | None | Deducted by exchange at source |
| Surcharge | Up to 37% | On income above INR 5 Cr | Effective rate can exceed 30% |
| Cess | 4% | On tax + surcharge | Health and education cess |
| Loss offset | NOT ALLOWED | None | Cannot offset crypto losses against gains |
Key Restrictions
No loss offset: Unlike most countries, India does NOT allow you to offset crypto losses against crypto gains. If you lose INR 1 lakh on one trade and gain INR 1 lakh on another, you still pay 30% tax on the gain (INR 30,000). The loss provides zero tax benefit.
No deductions: You cannot deduct electricity costs (mining), internet costs, trading fees, or any other expenses. Only the direct cost of acquisition (purchase price) reduces your taxable gain.
No carry-forward: Crypto losses cannot be carried forward to future years. Each year stands alone.
The 1% TDS Impact
Indian exchanges deduct 1% TDS on all crypto sales. For a trader with INR 10 lakh in monthly volume, TDS of INR 10,000 is withheld monthly — INR 1.2 lakh annually. This TDS can be claimed against your total tax liability, but it creates significant liquidity friction for active traders.
Strategies for Indian Traders
Long-term holding: Since there is no reduced rate for long-term holding, the only advantage is reducing TDS friction by trading less frequently.
International exchanges: Some Indian traders use international exchanges to avoid TDS (though they must still declare and pay 30% on gains). This carries regulatory risk.
Frequently Asked Questions
Do I have to pay tax on crypto?
In most countries, yes. Crypto gains are taxable in the USA, UK, Australia, Canada, India, Japan, Brazil, and most EU nations. The UAE and some jurisdictions offer zero or reduced rates. Always consult a local tax professional.
What happens if I don't report crypto taxes?
Tax authorities worldwide are investing in blockchain analytics to identify unreported crypto gains. Penalties range from fines (20-75% of unpaid tax) to criminal prosecution in severe cases. Compliance is strongly recommended.
Is holding crypto taxable?
Simply holding crypto is not a taxable event in any major jurisdiction. Tax is triggered when you sell, trade, spend, or otherwise dispose of crypto. Staking and mining rewards are typically taxed as income when received.
What crypto tax software should I use?
Koinly, CoinTracker, and TaxBit are the most popular options. All integrate with major exchanges and support tax reporting formats for multiple countries. Prices range from free to $200+/year.