How to Calculate Crypto Tax in India (2026)

India taxes income from Virtual Digital Assets under Section 115BBH of the Income-tax Act 1961, introduced by the Finance Act 2022 and effective from Assessment Year 2023-24.

The rate is a flat 30% plus applicable surcharge and 4% cess, regardless of your income slab. A separate provision, Section 194S, requires 1% TDS on the transfer of a VDA, in force since 1 July 2022.

The calculation in one line

Taxable VDA income = sale consideration minus cost of acquisition. That is the entire permitted computation under Section 115BBH. The result is taxed at a flat 30%, plus surcharge if applicable and 4% health and education cess.

What you can and cannot deduct

This is where most miscalculations happen. Section 115BBH allows a deduction for the cost of acquisition only. Nothing else.

Item	Deductible?	Note
Purchase price of the asset	Yes	This is the cost of acquisition
Exchange trading fees	Generally no	Not cost of acquisition; commonly disallowed
Transfer or gas fees	Generally no	Same reasoning
Internet, electricity, hardware	No	Explicitly outside the provision
Interest on money borrowed to invest	No	No deduction permitted
Losses from other VDAs	No	Each VDA is computed separately

A worked example

Suppose you buy 0.5 BTC for ₹20,00,000 and sell it later for ₹26,00,000, paying ₹5,000 in exchange fees on the sale.

1. Sale consideration: ₹26,00,000
2. Less cost of acquisition: ₹20,00,000
3. Taxable VDA income: ₹6,00,000 — the ₹5,000 fee is not deductible
4. Tax at 30%: ₹1,80,000
5. Plus 4% cess: ₹7,200
6. Total: ₹1,87,200, plus surcharge if your total income crosses the surcharge thresholds

Note that the 1% TDS already deducted under Section 194S is credited against this liability — it is not an additional cost, it is tax paid in advance. If your final liability is lower than the TDS deducted, the excess is refundable when you file.

Where people get it wrong

• Netting gains against losses. A gain on one coin cannot be reduced by a loss on another. See why crypto losses cannot be set off.
• Deducting fees. Widely assumed to be allowable; generally is not.
• Treating it as capital gains. VDA income has its own section and its own rate. Indexation and the usual capital gains reliefs do not apply.
• Forgetting crypto-to-crypto trades. Swapping one token for another is a transfer and is taxable, even though no rupees moved.
• Assuming small amounts are exempt. There is no basic exemption threshold for VDA income under 115BBH.

Surcharge and cess on top of 30%

The 30% is the base rate. Health and education cess of 4% applies on the tax, and surcharge applies where total income crosses the statutory thresholds — 10% above ₹50 lakh, 15% above ₹1 crore, and higher rates above that, subject to the caps and the differences between the old and new regimes.

The effective rate for a large gain is therefore meaningfully above 30%. Someone with total income above ₹1 crore faces 30% plus 15% surcharge plus 4% cess, an effective rate of roughly 35.88% on the VDA income.

Which cost basis method applies

Section 115BBH does not prescribe a cost-flow assumption, and this is a real practical gap. Where you bought the same token in several lots at different prices and sold part of the holding, you need a method to decide which lot was sold.

• FIFO — first in, first out. The most commonly applied convention and what most Indian exchanges use in their own statements.
• Specific identification — matching a disposal to an identified lot, which requires records good enough to support the identification.
• Average cost — used in some jurisdictions, less commonly applied here.

The important points are to choose a defensible method, to apply it consistently across years, and to keep records that support it. Switching methods between years to produce a better outcome is the pattern most likely to be challenged.

A second example: partial disposal from multiple lots

Suppose you bought 1 ETH at ₹1,50,000 in April, another at ₹2,50,000 in August, and sold 1 ETH for ₹2,80,000 in January.

1. Under FIFO, the lot sold is the April purchase, cost ₹1,50,000.
2. Taxable gain: ₹2,80,000 − ₹1,50,000 = ₹1,30,000.
3. Tax at 30% plus 4% cess: ₹40,560.
4. The August lot remains held at its ₹2,50,000 cost for a future disposal.

Had specific identification been used to match the August lot instead, the gain would have been ₹30,000 and the tax ₹9,360 — a materially different answer from the same transactions. This is why the method matters and why it needs to be recorded, not decided retrospectively.

Crypto-to-crypto trades

Exchanging ETH for SOL is a disposal of ETH. The consideration is the fair market value of what you received, and you compute gain against the cost of acquisition of the ETH. This catches active traders by surprise because there was no rupee transaction and no cash to pay the tax with — the liability arises anyway.

This is the main reason a portfolio tracker that records every trade matters for Indian users specifically: reconstructing a year of swap history at filing time is considerably harder than recording it as you go.

Related guides

• Crypto tax in India: the complete guide
• Crypto tax calculator for India
• Tracking crypto for Indian tax records
• Best crypto exchanges in India

This page is educational and not tax advice. Indian tax law changes and individual circumstances differ. Confirm your position with a qualified chartered accountant before filing.