Crypto Tax Under ITA explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
1. VDA Defined
Virtual Digital Assets (VDAs) include all cryptocurrencies (Bitcoin, Ethereum, BNB, Solana etc.), NFTs (Non-Fungible Tokens), and any other digital assets defined by the government under ITA 2025. The definition is broad and technology-neutral — covering both current and future digital asset types.
2. Tax Rate: 30% Flat on All VDA Gains
Section 67A imposes 30% tax + 4% cess = 31.2% effective rate on all VDA income. Key features of this rate:
- No distinction between short-term and long-term holding — all gains taxed at 30%
- Section 157 rebate (zero tax up to Rs 12L) does NOT apply to VDA income — tax from the first rupee
- No deduction allowed except cost of acquisition
- No loss from one VDA can offset gain from another
- No carry-forward of VDA losses
3. What Triggers VDA Tax
| Transaction | Taxable Event? | Basis of Tax |
|---|---|---|
| Sale of crypto for INR | Yes | 30% on (sale price minus cost) |
| Crypto-to-crypto swap | Yes | 30% on (FMV of received asset minus cost) |
| NFT sale | Yes | 30% on gain |
| Staking rewards received | Yes | 30% on FMV at time of receipt |
| Mining income | Yes | 30% on FMV at time of mining |
| Airdrop received | Yes | 30% on FMV at receipt |
| Holding (no sale) | No | No taxable event |
4. TDS Under Section 67B
When any person pays consideration for transfer of a VDA exceeding Rs 10,000 (Rs 50,000 for specified persons), TDS at 1% must be deducted under Section 67B. Indian exchanges deduct TDS automatically on each sell transaction. For peer-to-peer trades, the buyer deducts and deposits TDS. The TDS (1% of sell consideration) appears in the seller Form 26AS as a credit — offsetting their 30% tax liability.
5. Cost of Acquisition for Crypto Received as Salary/Gift
If crypto was received as salary, the FMV at the time of receipt is the cost of acquisition (the salary amount already taxed as perquisite under Section 17(2)). If received as a gift from a non-relative and taxed as Other Sources income (above Rs 50K threshold), that FMV is the cost. This prevents double taxation when the same crypto is later sold.
6. Reporting in ITR
VDA income must be reported in Schedule VDA in ITR-2 or ITR-3. Each transaction must be entered: type of VDA, date of acquisition, cost, date of transfer, sale consideration, and gain. Aggregate all transactions from all exchanges (Indian and foreign). International exchange transactions must also appear in Schedule FA (foreign assets). AIS now shows VDA TDS credits — mismatch triggers notices.
7. Why TaxClue
Active crypto traders with hundreds of transactions need systematic capital gains computation. TaxClue reconciles exchange statements, computes Schedule VDA, and files ITR accurately. Contact us for crypto tax under ITA 2025.
Key Facts About Crypto Tax Under ITA
- Applies in: All states across India, under the relevant central law.
- Mode: Mostly online via the official government portal.
- Typical timeline: Ranges from a few days to a few weeks depending on the case.
- Non-compliance: May attract penalties, interest or late fees.
- Expert help: TaxClue completes the entire process end to end for you.
What is the tax on cryptocurrency in India?
Under Section 67A of ITA 2025, all income from VDA (Virtual Digital Asset) transfers including crypto sale, swap, NFT sale, staking, and mining is taxed at a flat 30% plus 4% cess — effective 31.2%. No basic exemption applies and the Section 157 rebate that gives zero tax on income up to Rs 12L does NOT apply to VDA income. Even if total income is below Rs 12L, the VDA portion is taxed at 30% from the first rupee.
Can crypto losses be set off against other gains?
No. VDA losses cannot be set off against any income — not salary, business profit, or capital gains from shares/property. Losses from one cryptocurrency also cannot offset gains from another VDA. VDA losses also cannot be carried forward to future years. This makes VDA the most restrictive income category in ITA 2025 — each profitable transaction is independently taxed at 30% with no relief from any other loss.
Over 90% of compliance penalties in India arise from missed due dates — timely handling can save businesses thousands of rupees each year.
Crypto Tax Under ITA: a key compliance topic in Indian tax and corporate law that businesses and individuals must understand to remain compliant.