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India Crypto Tax and Regulation: 2026 Rules Explained

Crypto is legal to buy, sell, and hold in India, but it is not legal tender and it carries one of the strictest tax regimes of any major crypto market. This page explains the current rules in plain language, with sources, so you know where to verify each figure yourself.

Is crypto legal in India?

Yes. Buying, selling, and holding cryptocurrency — officially termed a Virtual Digital Asset (VDA) — is legal in India. It is not banned and there is no proposal before Parliament to ban it as of the most recent public confirmations in 2026. Crypto is not, however, recognized as legal tender: it cannot be used as an official substitute for the rupee, and the Reserve Bank of India (RBI) has repeatedly cautioned about its risks without imposing a ban.

The 30% flat tax (Section 115BBH)

Since the Union Budget 2022, gains from transferring a VDA are taxed at a flat 30% under Section 115BBH of the Income Tax Act, regardless of how long you held the asset and regardless of your regular income tax slab. There is no distinction between short-term and long-term gains for crypto, unlike listed equities.

  • No loss offset — a loss on one VDA cannot be set off against a gain on another VDA, or against any other head of income.
  • No carry-forward — VDA losses cannot be carried forward to a future assessment year.
  • No standard deductions — only the cost of acquisition can be deducted; other expenses (exchange fees, internet, hardware) generally cannot be.
  • Airdrops and staking rewards are commonly treated as income at the time they are received, at fair market value, separate from any later 30% gain on disposal.

1% TDS on transfers (Section 194S)

A 1% Tax Deducted at Source applies to many VDA transfers under Section 194S, deducted at the earlier of credit or payment. The commonly cited threshold is transactions exceeding ₹10,000 in a financial year (₹50,000 for specified persons, such as certain individuals/HUFs not required to get their accounts audited) — confirm the current threshold for your situation, as thresholds and specified-person definitions can be revised. TDS deducted shows up in your Form 26AS and Annual Information Statement (AIS) and can be claimed as credit against your final tax liability when you file your return.

18% GST on exchange fees — not on your gains

Since July 2025, Indian crypto exchanges have been required to charge 18% GST on the service fee they charge for executing a trade — this is a tax on the platform’s fee, not on your trade value or your profit. It applies under the general services rate (HSN code commonly cited as 960899) because no dedicated GST rate exists specifically for VDA transfers or exchange services.

FIU-IND registration and AML compliance

Crypto exchanges and other Virtual Digital Asset Service Providers operating in India are required to register with the Financial Intelligence Unit-India (FIU-IND), part of the Ministry of Finance, and comply with anti-money-laundering (PMLA) obligations. Reporting from Indian financial media put the number of FIU-registered exchanges at roughly 49 in FY 2024-25. Using an FIU-registered platform is a practical compliance signal, though registration alone does not certify solvency or security.

Reporting crypto in your income tax return

VDA income and gains are reported on a dedicated Schedule VDA in the Income Tax Return. Reviewing your Form 26AS and AIS before filing helps confirm the TDS an exchange actually deposited matches what was deducted from your trades — mismatches are one of the most common issues Indian tax practitioners report with VDA filings.

What this page is not

This is a plain-language summary for orientation, not a substitute for professional advice. Tax thresholds, section numbers, and reporting rules have changed multiple times since 2022 and can change again with a future Budget or CBDT circular. CoinBatmi is not a tax advisor, a chartered accountant, or a law firm — verify every figure on this page against the Income Tax Department, a qualified CA, or the primary sources linked below before making a filing or trading decision.

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