Crypto tax in India (2026): Trade smarter with clarity and confidence

Crypto trading in India isn’t just about market timing anymore; it’s also about understanding how taxes affect your real returns. With fixed tax rates, transaction-level deductions, and strict loss rules, even profitable trades can feel confusing without the right context.

Whether you’re a long-term holder or an active trader, knowing how crypto taxation works in India helps you plan better, stay compliant, and trade with confidence instead of uncertainty.

Key takeaways

• Crypto profits in India are taxed at a flat 30%, regardless of income slab or holding period

• A 1% TDS applies to many crypto transactions and directly affects trading liquidity

• New reporting penalties apply for missing or incorrect crypto transaction disclosures

How crypto is taxed in India

In India, cryptocurrencies are classified as Virtual Digital Assets (VDAs). This classification places crypto in its own tax category, separate from stocks, mutual funds, or traditional investments.

What does that mean in practice?

It means crypto profits don’t follow capital gains rules. Instead, they follow a stricter framework designed specifically for digital assets; one that prioritizes transaction-level taxation over net profit calculation.

For traders, this changes how you think about gains, losses, and even trade frequency.

Understanding the 30% tax on crypto profits

Every profitable crypto transaction is taxed at 30%, plus applicable surcharge and cess.

This tax applies:

• No matter how long you held the asset

• No matter how small or large the profit

• Regardless of your income bracket

For example, imagine you buy a token for ₹50,000 and later sell it for ₹70,000. Your ₹20,000 profit is taxed at 30%, even if that was your only trade for the year.

There are no slab benefits and no long-term holding advantages. This is why many traders say crypto taxes in India reward planning, not speed.

What the 1% TDS really means for traders

Apart from profit tax, India applies a 1% Tax Deducted at Source (TDS) on crypto transactions.

This deduction happens:

• At the time of selling crypto for INRttt65yu

• Or when converting one crypto asset into another

While 1% may sound small, it has a noticeable impact on active traders. Frequent trades mean repeated TDS deductions, which can lock up a significant portion of trading capital.

The important thing to understand is this:

• TDS is not an extra tax

• It can be adjusted against your final tax liability

• Excess TDS can be claimed as a refund during ITR filing

However, until that adjustment happens, your usable capital is reduced, which makes strategy and trade selection even more important.

Why crypto losses don’t reduce your tax bill

This is where many traders get caught off guard.

Under current Indian tax rules:

• Crypto losses cannot be set off against crypto gains

• Losses cannot be adjusted against any other income

• Each profitable trade is taxed independently

In simple terms, profits are taxed, but losses don’t help you recover any of that tax burden.

This makes risk management non-negotiable. Large, careless losses don’t just hurt emotionally; they don’t provide any tax relief either.

Why clean records matter more than ever

If taxes are the rulebook, records are your safety net.

Most tax confusion doesn’t come from complex laws; it comes from missing or incomplete data. Traders who track properly spend less time worrying and more time trading confidently.

It’s best to maintain:

• Buy and sell prices with timestamps

• Profit and loss calculations

• Deposit and withdrawal history

• Wallet transfers and internal movements

Having clean records helps you:

• Calculate taxes accurately

• Reconcile TDS deductions

• File returns without last-minute stress

For active traders, using structured tracking tools or exchange-level exports can save hours during tax season.

New crypto reporting requirements introduced in Budget 2026

In February 2026, the Indian government introduced a new compliance layer focused specifically on crypto transaction reporting, announced during the Annual Budget presentation in Parliament on February 1.

Under this update, penalties may apply not just for unpaid taxes, but also for missing or incorrect crypto transaction statements, signalling a stronger focus on transparency and accurate disclosures.

What the new reporting penalties mean for traders

Under the newly announced framework:

• Failure to furnish crypto transaction statements may attract a penalty of ₹200 per day for each day of non-compliance

• Furnishing inaccurate information, or failing to correct incorrect details, may result in a flat penalty of ₹50,000

These penalties are separate from existing obligations such as the 30% profit tax and 1% TDS.

In other words, even if your taxes are paid correctly, incomplete or inaccurate reporting can still result in penalties.

Trading smarter under India’s crypto tax framework

India’s crypto tax structure doesn’t reward impulsive trading; it rewards discipline.

Successful traders adapt by:

• Avoiding overtrading just for small moves

• Using planned entries and exits

• Managing position sizes carefully

• Staying patient instead of chasing momentum

Crypto is still a long-term game. Traders who combine market knowledge with tax awareness often outperform those who ignore the rules and hope for the best.

The mindset shift every Indian crypto trader needs

The biggest shift isn’t technical, it’s psychological.

Instead of asking: “Can I make a quick profit?”

Smart traders ask: “What will my profit look like after tax?”

Once you start trading with that clarity, decisions become calmer, cleaner, and more sustainable. And in a market as volatile as crypto, clarity is a competitive advantage.

Closing thoughts

Crypto taxation in India may feel strict, but it doesn’t have to feel confusing. When you understand how profits, TDS, and losses work, you’re no longer reacting; you’re planning.

And in trading, planning always beats panic.

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