Crypto Tax India 2026: New Income Tax Act Rules Explained (FY 2025-26)

If you're filing your ITR this July, your crypto gains are still taxed under the old Income-tax Act, 1961, not the new 2025 Act. Confused about which law actually applies to you right now? You're not the only one. Most guides skip this part, so here's the flat 30% tax, the 1% TDS, the new 18% GST layer, and exactly where each Act starts and stops.

Table of Contents

1. Which Law Applies to Your Crypto Tax Right Now

2. What Is a Virtual Digital Asset (VDA)

3. Who Does This Apply To

4. Crypto Tax India 2026: Rates and Rules

5. Old Act vs New Act: Full Comparison

6. Worked Examples With Real Numbers

7. How to File Crypto Tax: ITR-2, ITR-3 and Schedule VDA

8. What If Something Goes Wrong

9. Documents You'll Need

10. Penalties You Should Know About

11. FAQ

Which Law Applies to Your Crypto Tax Right Now

Here's the confusion killer, stated plainly. The Income-tax Act, 2025 came into force on 1 April 2026. But it does not govern the return you're filing this year.

Your crypto trades from FY 2025-26 (1 April 2025 to 31 March 2026) fall under Assessment Year 2026-27, and AY 2026-27 is assessed entirely under the old Income-tax Act, 1961. That means Section 115BBH, Section 194S, and Section 2(47A) are the numbers that matter for the return due this July and August. This is the last filing season under the 1961 Act.

Only crypto transfers happening from 1 April 2026 onward, in what the new Act calls Tax Year 2026-27, fall under the 2025 Act's renumbered sections. You won't file that return until 2027.

So which sections apply, and when?

This article covers both periods, side by side, so you don't mix up the numbering. You can also check the Income Tax Department's own Act comparison page if you want to see the source text yourself.

What Is a Virtual Digital Asset (VDA)

A VDA is any crypto token, coin, or NFT that's created through cryptographic means, holds value, and can be transferred electronically. Bitcoin, Ethereum, meme coins, stablecoins, and NFTs all qualify. Indian rupees and foreign currency don't.

Under the 1961 Act, this sits in Section 2(47A). The Finance Act 2025 added sub-clause (d), which names "crypto-asset" explicitly, so there's no room left for an exchange to argue that a specific token falls outside the definition. [VERIFY: the 2025 Act carries this definition into a renumbered clause under Section 2; the exact new clause number wasn't confirmed against the bare Act text during this review, so treat it as pending confirmation rather than settled fact.]

Who Does This Apply To

One thing worth flagging: if you only bought crypto this year and never sold, swapped, or spent it, you owe zero VDA tax for FY 2025-26. But if you're an NRI, or a resident holding crypto abroad worth over ₹20 lakh, you may still owe a Schedule FA disclosure even without a single sale.

Crypto Tax India 2026: Rates and Rules

Here are the actual figures, not vague descriptions of them.

• Tax rate: flat 30% on gains, under Section 115BBH of the 1961 Act (applies to FY 2025-26). Add 4% health and education cess on top. Effective minimum rate: 31.2%.

• Surcharge: kicks in above ₹50 lakh of total income, at the usual slab-linked rates.

• Deduction allowed: only cost of acquisition. Gas fees, exchange commissions, and internet bills don't count, no matter how tempting it is to claim them.

• TDS on crypto: 1% on the sale amount under Section 194S, deducted by the buyer or the exchange. The threshold is ₹50,000 a year for specified persons (business turnover above ₹1 crore, or professional receipts above ₹50 lakh) and ₹10,000 a year for everyone else.

• Loss set-off: not permitted, not even against a gain from a different crypto asset. Losses can't be carried forward either.

• Crypto gifts: anything over ₹50,000 from a non-relative is taxed as income from other sources at your slab rate, under Section 56(2)(x), not at the flat 30%.

• GST on crypto trading: since 7 July 2025, exchanges must charge 18% GST on service fees, including trading, withdrawal, and staking charges. This sits on top of the 30% tax and 1% TDS, not instead of them.

Here's what that GST actually costs you. Say your exchange charges a ₹1,000 trading fee. You now pay an extra ₹180 as GST on that fee alone. It won't touch your taxable gain, but it will shrink what actually lands in your account.

Old Act vs New Act: Full Comparison

This is the side-by-side table most crypto tax guides never bother building.

The substance hasn't changed at all. What changed is the section numbers, and the extra reporting teeth built around them.

Worked Examples With Real Numbers

Example 1: the common case (FY 2025-26, old Act numbering)

Suresh, a salaried employee in Pune, bought Ethereum worth ₹80,000 in December 2024. He sold it in October 2025 for ₹1,30,000.

• Gain = ₹1,30,000 minus ₹80,000 = ₹50,000

• Tax under Section 115BBH = 30% of ₹50,000 = ₹15,000

• Cess = 4% of ₹15,000 = ₹600

• Total tax = ₹15,600

• TDS under Section 194S = 1% of ₹1,30,000 = ₹1,300, already deducted by the exchange

Suresh claims that ₹1,300 as TDS credit and pays the remaining ₹14,300 through advance tax or self-assessment.

Example 2: the edge case most guides skip (mixed gain and loss, same year)

Farida trades often. In FY 2025-26 she sells Dogecoin bought for ₹40,000 at ₹25,000, a ₹15,000 loss. In the same year, she sells an NFT bought for ₹2,00,000 at ₹3,50,000, a ₹1,50,000 gain. Her exchange also charges her a ₹1,200 fee, which now carries 18% GST on top.

• The ₹15,000 Dogecoin loss cannot offset the NFT gain. This is the rule almost every new investor gets wrong.

• Tax on the NFT gain alone = 30% of ₹1,50,000 = ₹45,000

• Cess = 4% of ₹45,000 = ₹1,800

• Total tax = ₹46,800, calculated on ₹1,50,000 alone; the ₹15,000 loss simply disappears

• TDS under Section 194S = 1% of ₹3,50,000 = ₹3,500

• GST on the ₹1,200 exchange fee = 18% of ₹1,200 = ₹216, an extra cost on top of everything above

Would splitting these two trades across separate financial years help Farida? No. The no-set-off rule applies whether the trades happen on the same day or years apart.

How to File Crypto Tax: ITR-2, ITR-3 and Schedule VDA

1. Gather every transaction from every exchange, wallet, and P2P trade for FY 2025-26.

2. Identify each transfer event. Selling, swapping one crypto for another, spending on goods, and gifting all count as transfers. Holding doesn't.

3. Work out cost of acquisition for each transaction, using the FIFO (first-in, first-out) method for consistency.

4. Compute profit as sale consideration minus cost of acquisition. Nothing else can be deducted.

5. Apply the 30% flat tax plus 4% cess, and add surcharge if your total income crosses ₹50 lakh.

6. On the e-filing portal, pick ITR-2 for capital gains, or ITR-3 if crypto trading is closer to a business for you.

7. Open Schedule VDA and enter transaction-wise details for every single transfer, not a net summary figure.

8. Cross-check your total against Form 26AS and your Annual Information Statement (AIS) to catch any TDS mismatch before you submit.

9. Pay any balance tax through Challan 280, then e-verify the return within 30 days.

What If Something Goes Wrong

You filed the wrong ITR form. Filed ITR-1 while holding VDA income by mistake? File a revised return under Section 139(5) before 31 March 2027, switching to ITR-2 or ITR-3 with Schedule VDA filled in correctly.

Your TDS credit doesn't match Form 26AS. This usually means the exchange quoted your PAN incorrectly, or used the wrong section code. Raise a grievance through TRACES and ask the deductor to file a correction statement.

You never reported past crypto income. The Income Tax Department has already sent over 44,000 notices flagging mismatches for AY 2023-24 and AY 2024-25, uncovering more than ₹888 crore in undisclosed VDA income through exchange data and AIS cross-checks. File an updated return (ITR-U) for the relevant year and pay the extra tax with interest. That's a lot cheaper than waiting for a scrutiny notice to land.

Documents You'll Need

Penalties You Should Know About

Not disclosing VDA income counts as under-reporting under Section 270A: a 50% penalty on the tax you should have paid. Deliberate misreporting, like inflating your cost of acquisition, attracts 200%.

Budget 2026 gave the Income Tax Department real teeth against exchanges too. Under Section 446 of the 2025 Act, reporting entities that fail to file the transaction statement required under Section 509(1) face ₹200 per day in penalty, plus ₹50,000 for inaccurate data they don't correct. This targets exchanges rather than individual traders directly, but it means any gap between what you file and what your exchange reports becomes far easier for the department to catch.

If you're holding crypto abroad worth over ₹20 lakh and skip Schedule FA, Black Money Act penalties apply on top of the regular VDA tax, and those run steeper than the usual Section 270A rates.

Failing to deduct TDS on a P2P trade makes the buyer liable for the TDS amount itself, plus 1.5% monthly interest and a matching penalty.

FAQ

Does the Income Tax Act 2025 change crypto tax rules in India?

Not in any real sense. The 30% rate, the 1% TDS, and the no-loss-set-off rule all carry forward unchanged. Only the section numbers change: Section 115BBH becomes Section 194(1), Table Serial No. 4, and Section 194S becomes Section 393(1). For FY 2025-26 filing, ignore the new numbers; they don't apply yet.

Is crypto tax still 30% under the new Income Tax Act 2025?

Yes. Neither Budget 2025 nor Budget 2026 touched the flat rate. It stays at 30% plus 4% cess, whichever Act's numbering you happen to be citing.

Which ITR form should I file for crypto gains in FY 2025-26?

ITR-2 if you're treating your gains as capital gains from occasional trading. ITR-3 if your crypto activity looks like a business, with frequent, high-volume trades.

Can I set off crypto losses in India in 2026?

No, and this is the single biggest misconception floating around. You cannot set off a crypto loss against another crypto gain, or against salary, business income, or any other head. Losses also can't be carried forward to next year.

What's the penalty for not reporting crypto in my ITR?

Under Section 270A, non-disclosure attracts a 50% penalty on the unpaid tax. Deliberate misreporting attracts 200%. Over 44,000 notices have already gone out for past mismatches, so don't assume the department won't notice yours.

Is crypto tax on staking and airdrops different from tax on trading?

Not really, but it does hit you twice. Staking rewards and airdrops are taxed as income at your slab rate the moment you receive them. When you later sell that same crypto, any further gain is taxed again at 30% under the VDA rules.

Do I need to report crypto held on a foreign exchange like Binance or KuCoin?

Yes. If your total foreign crypto holdings cross ₹20 lakh, you must disclose them under Schedule FA, separate from your regular VDA reporting. Skip that, and you're looking at Black Money Act exposure, which carries far steeper penalties than a routine VDA miss.

When is the crypto tax deadline for FY 2025-26 (AY 2026-27)?

31 July 2026 for ITR-2 filers on the capital gains route, and 31 August 2026 for ITR-3 filers on the business income route, unless the government announces a separate extension.

Does GST apply on top of the 30% crypto tax?

Not on your trading profit itself. GST at 18%, effective from 7 July 2025, applies only to the service fees your exchange charges, things like trading fees and withdrawal charges, not to the gain you've actually made.

How is the old Income Tax Act 1961 different from the new Income Tax Act 2025 for crypto?

The 1961 Act uses Section 115BBH, Section 194S, and Section 2(47A). The 2025 Act folds these into a tabular structure and adds two brand-new penalty sections, 446 and 509(1), that never existed before. The substance is identical; only the citations and the enforcement layer changed.

I made a mistake in my crypto tax filing last year. What do I do now?

File a revised return if you're still within the window, or an updated return (ITR-U) if the original deadline has already passed. With more than 44,000 notices already out for AY 2023-24 and AY 2024-25 mismatches, correcting things voluntarily now beats waiting for a department notice later.

What is the "per-transaction" reporting rule in Schedule VDA?

Schedule VDA requires line-by-line reporting for every single transfer: date of acquisition, date of transfer, cost, and sale value. It's not a single net-profit figure. A trader with 200 swaps in a year needs 200 rows, not one tidy summary number.

What to Do Right Now

Pull your complete transaction history from every exchange you've used this year, and reconcile it against Form 26AS before you go anywhere near the ITR form. If you're also reporting equity or property gains alongside your crypto income, run those through Toolisky's Capital Gains Tax Calculator so your entire FY 2025-26 tax picture sits in one place. Received crypto as a gift this year? Check your exact liability with the Gift Tax Calculator for Non-Relatives before assuming it's tax-free.

There's no dedicated crypto tax calculator on Toolisky yet, so for now you'll need to combine the arithmetic above with the steps in this guide. For a deeper dive into what changes once Tax Year 2026-27 actually begins, our VDA tax guide under the new Income Tax Act 2025 walks through Section 194 and Section 393(1) in full, and our Income Tax Act 2025 vs 1961 comparison covers the wider renumbering beyond crypto. For the bare Act text itself, the Income Tax Department's official portal remains the final word.

For educational purposes only. Verify all figures at official sources before acting. Toolisky is not affiliated with any government body. Consult a qualified CA or legal professional before making compliance decisions. See toolisky.com/accuracy-and-limitations.