Crypto Tax India 2026: Section 115BBH 30% Tax, 1% TDS & ITR Filing Rules

Complete Executive Summary: Crypto Tax in India 2026

New rules under the Income Tax Act are applicable to Virtual Digital Assets (VDA) and Cryptocurrencies in India. Whether you trade Bitcoin, Ethereum, Altcoins, or P2P USDT, understanding tax compliance has become essential in 2026.

In this detailed guide, we will explain Section 115BBH, 1% TDS under Section 194S, Loss Offsetting restrictions, and ITR-2 / ITR-3 Schedule VDA filing in detail.

📊 Quick Action Tool: Use our Crypto Tax Calculator to calculate the exact tax and 1% TDS on your crypto trades.

1. Section 115BBH: 30% Flat Tax Rules

Under Section 115BBH of the Indian Income Tax Act, a Flat 30% Tax is levied on the net profit arising from any VDA / Crypto transfer. Additionally, with a 4% Health & Education Cess included, the effective tax rate becomes 31.2%.

Key Points:

• No Basic Exemption Limit: The standard basic tax exemption limit of 2.5 Lakh / 3 Lakh does not apply to crypto profits.
• No Deduction Allowed: Only the cost of acquiring the token (Acquisition Cost) can be deducted. No deductions are allowed for internet, exchange fees, or gas fees.

2. Section 194S: 1% TDS Calculation Table

In accordance with the rule effective from July 1, 2022, deducting 1% TDS on every crypto sale/transfer is mandatory.

📁 Tax Report Download: Check out the Tax Report Generator for an ITR-compliant Excel/PDF report of all your Indian and international exchange trades.

3. Loss Offsetting Rules (Can Losses Be Deducted?)

Currently, under Indian Income Tax Rules:

1. No Cross Token Set-off: Losses incurred in Bitcoin cannot be set off against profits from Ethereum.
2. No Carry Forward: Crypto losses are not permitted to be carried forward to subsequent financial years.

Frequently Asked Questions (FAQs)

Q1. Can a 1% TDS Refund Be Claimed?

Yes! If your total taxable income is below the basic exemption limit, you can file your ITR and claim a refund for the 1% TDS deducted under Section 194S.

Q2. Which Tools Auto-Calculate Tax?

You can calculate the 30% tax and 1% TDS on any of your trades using our free Crypto Tax Calculator.

Disclaimer: This article is for educational purposes only. Please consult a Chartered Accountant (CA) for tax filing.

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🧮 Interactive Tools: Try our free Crypto Tax Calculator and Crypto SIP Calculator for your portfolio calculation and tax estimation.

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🧮 Interactive Tools: Try our free Crypto Tax Calculator and Crypto SIP Calculator for your portfolio calculation and tax estimation.