In this guide
Which tax year does this cover?
AY 2026-27 covers income earned from 1 April 2025 to 31 March 2026 under the Income-tax Act, 1961. If you sold, exchanged or otherwise transferred a virtual digital asset (VDA) during this period, check how to report income from the transfer in your return.
Cryptocurrencies and some other crypto assets can be VDAs under the Act. The tax treatment depends on the transaction, so do not assume that only withdrawals into an Indian bank account need to be reported.
How is income from a VDA transfer taxed?
Section 115BBH applies a 30% tax rate to income from transferring a VDA, plus applicable surcharge and cess. The calculation generally allows the cost of acquisition, but not other expenses or deductions.
A loss from transferring a VDA cannot be set off against other income under the Act. The special rules also prevent loss carry-forward.
For a simple sale, the basic calculation is:
| Item | Example |
|---|---|
| Sale consideration | ₹1,50,000 |
| Cost of acquisition | ₹1,00,000 |
| Income from transfer before tax | ₹50,000 |
| Tax at 30%, before surcharge and cess | ₹15,000 |
This is an illustration. Your return calculation may depend on the transaction and other applicable tax provisions.
A sale is not the only transaction to review. Exchanging one crypto asset for another or using a VDA to pay for something may also involve a transfer. Keep records of all transactions, even if they did not produce a profit.
How to report VDA income in your ITR
ITR-2 and ITR-3 have a separate Schedule VDA for transaction-wise reporting. The correct ITR form depends on your income sources and other eligibility conditions. For example, business or professional income may affect which form you need to use.
For each transfer, gather the information requested in the applicable return utility, including:
- Date of acquisition and date of transfer.
- Sale or transfer value in Indian rupees.
- Cost of acquisition.
- Income or loss from the transaction.
Check the AY 2026-27 ITR form and utility before filing. Reconcile the figures with your exchange statements, wallet records and bank statements. Review your Annual Information Statement (AIS) and Form 26AS, but report taxable income even if a transaction is not reflected there.
What about TDS under Section 194S?
Section 194S generally requires 1% TDS on consideration paid to a resident for transferring a VDA. TDS is calculated on the consideration, not just the profit.
No TDS is required if the payer’s total consideration during the financial year does not exceed ₹10,000, or ₹50,000 if the payer is a “specified person” under the law. This generally includes certain individuals and Hindu Undivided Families (HUFs).
TDS is a tax credit, not the final tax on the transfer. Check that it is reported against your PAN in Form 26AS or other tax-credit information, then claim the eligible credit in your return. If the credit is missing or incorrect, contact the person responsible for deducting and reporting it.
Records to keep
Keep transaction histories from exchanges and wallets, purchase and sale records, bank statements and TDS details. If assets moved between wallets you own, retain records showing the ownership and movement. This can help distinguish a wallet transfer from a sale, swap or other disposal.
TaxClear’s guide to keeping income-tax records discusses records for crypto transactions. For return preparation, see the online ITR filing guide for AY 2026-27.
Frequently asked questions
Is crypto income taxed at 30% in India?
Section 115BBH applies a 30% rate to income from VDA transfers, plus applicable surcharge and cess.
Can I deduct exchange fees from VDA income?
The special calculation generally allows the cost of acquisition, but not other expenses or deductions.
Can I set off a crypto loss against my salary?
No. A loss from transferring a VDA cannot be set off against other income under the Act.
Is TDS under Section 194S the final tax?
No. It is a tax credit. Report the VDA income and claim eligible TDS credit in your return.
Must I report a crypto transaction if I did not withdraw money to my bank?
Review the transaction itself. A sale, swap or other transfer may need to be reported even if the proceeds remained on an exchange or in a wallet.
