The flat 30% regime, what you cannot deduct, and why losses give no relief
Income from the transfer of a virtual digital asset (crypto, NFTs and other notified VDAs) is taxed at a flat 30% under Section 115BBH, regardless of how long you held it, so there is no long-term or short-term distinction and no slab benefit. The only deduction allowed against the gain is the cost of acquisition, not exchange fees, interest, infrastructure or any other expense. And crypto losses cannot be set off against crypto gains, against any other income, or carried forward. On top of this, a 1% TDS applies under Section 194S, and the Section 87A rebate does not cover this income.
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A flat 30%, no holding-period benefit
Section 115BBH taxes the gain on transferring a VDA at a flat 30% (plus surcharge and cess), whether you held it for a day or for years. There is no long-term concession, no indexation, and the gain is not eligible for any lower special rate. This is deliberately the strictest treatment of any asset class in India, designed to discourage speculative trading, and it applies to individuals and businesses alike.
No expenses, no loss relief
Two rules make this regime harsh. First, the only deduction from the sale value is the cost of acquisition, you cannot deduct exchange or gas fees, interest on money borrowed to buy, hardware, electricity or any other cost. Second, a loss on one VDA cannot be set off against a gain on another VDA, against any other head of income, or carried forward to a future year. So two trades, one up and one down, are taxed on the gain in full with no relief for the loss.
warningCrypto losses are dead for tax: they cannot offset crypto gains, other income, or future years. A profitable trade and a loss-making one in the same year are still taxed on the full profit of the winner.
The 87A rebate does not help
Crypto income under Section 115BBH is special-rate income, so the Section 87A rebate, which makes ordinary income up to Rs 12 lakh tax-free under the new regime, does not apply to it. A person whose only other income is below the exemption still pays 30% on their crypto gain. Combined with the 1% TDS under Section 194S and the no-loss rule, this makes accurate record-keeping of every acquisition cost essential.
tipKeep a clean record of the acquisition cost of every VDA, it is the only deduction you get. Without it, you risk being taxed at 30% on close to the full sale value.
Income-tax Act 1961 s.115BBH (flat 30% on VDA transfer; no expense except cost; no loss set-off) (re-enacted in the Income-tax Act 2025)
Income-tax Act 1961 s.194S (1% TDS on VDA transfer)
Income-tax Act 1961 s.87A (rebate does not cover special-rate crypto income)
Frequently asked questions
What rate is crypto taxed at in India?+
A flat 30% under Section 115BBH (plus surcharge and cess), regardless of how long you held the asset. There is no long-term or short-term distinction, no indexation, and no lower special rate. The same 30% applies to individuals and businesses on income from transferring crypto and other virtual digital assets.
Can I deduct my exchange fees or other crypto costs?+
No. The only deduction allowed against the sale value under Section 115BBH is the cost of acquisition. Exchange and gas fees, interest on borrowed money, hardware, electricity and every other cost are not deductible. This is why keeping an accurate record of each asset's acquisition cost matters so much.
Can I set off crypto losses against my gains?+
No. A loss on one virtual digital asset cannot be set off against a gain on another, against any other income, or carried forward to a future year. So if you have one winning trade and one losing trade in a year, you are taxed at 30% on the full gain of the winner, with no relief for the loss.
Does the Rs 12 lakh tax-free band cover crypto gains?+
No. Crypto income under Section 115BBH is special-rate income, and the Section 87A rebate that makes income up to Rs 12 lakh tax-free does not apply to it. Even if the rest of your income is below the exemption, your crypto gain is still taxed at 30%.