No. In India, a loss on Bitcoin or any other virtual digital asset cannot be set off against any other income. Not against your salary, not against gains on shares, not against business income, and not even against a gain on a different crypto. It also cannot be carried forward to a later year. Each profitable transfer is taxed at a flat 30% on its own, plus surcharge where applicable and 4% cess.
You still have to report the losses in Schedule VDA of your ITR. They just do not reduce your tax. This is the single most misunderstood rule in Indian crypto tax, and it changes how you should think about trading. Below is a worked example, the exact scope of the rule, and what I think it means for how you hold Bitcoin.
The rule quietly punishes frequent trading
I co-founded Unocoin in 2013, nine years before India brought in its VDA tax regime. When the Finance Act 2022 arrived with a flat 30% and no loss set-off, it changed the maths of trading overnight.
Think about what the rule does. If you trade in and out often, some trades will win and some will lose. In most of the tax system, the losers soften the winners. Here they do not. You pay 30% on every winner and get nothing back for every loser. Over a year of active trading, that can leave you owing tax even when your overall result is flat or negative.
That is one reason I talk about slow, regular buying and holding instead of jumping in and out. It is not a prediction about the price. It is just how the rules are written.
The rule in one line
Under the VDA rules introduced through section 115BBH, income from transferring a VDA is taxed at 30%, only the cost of acquisition is deductible, and any loss from a VDA transfer cannot be set off against any other income and cannot be carried forward to later years.
That is all of it. The rest of this post is just what those words mean in practice.
A worked example
This is the example from our own losses guide.
In one financial year you sold two different assets. On the first you made a gain of ₹40,000. On the second you made a loss of ₹30,000.
Your instinct says you made ₹10,000 overall and should pay 30% of that, which is ₹3,000. The law says otherwise.
- Taxable gain: ₹40,000 (the loss is ignored)
- Tax at 30%: ₹12,000
- Cess at 4% of the tax: ₹480
- Total: ₹12,480, plus surcharge if your income is high enough
So on an overall result of ₹10,000, you pay ₹12,480 in tax. That is not a typo. It is the rule.
The TDS deducted on both sales, including the losing one, still counts as tax already paid. So when you file, add up all the TDS and subtract it from what you owe. Our tax calculator lets you run each sale separately.
A second example: a year of active trading
Now take a made-up year of active trading. You close six trades. Three win ₹20,000 each. Three lose ₹25,000 each. Overall, you are down ₹15,000.
- Taxable gains: 3 x ₹20,000 = ₹60,000
- Tax at 30%: ₹18,000
- Cess at 4%: ₹720
- Total tax: ₹18,720
- Effect of ₹75,000 of losses: none
You lost ₹15,000 on the year and still owe ₹18,720 in tax, before counting the TDS deducted on all six sales, which you claim back when you file. This is what I mean when I say the rule quietly punishes frequent trading. Most people do not discover it until they sit down with their statements in July.
Not even one coin against another
This catches people who think the rule only stops crypto losses reducing salary tax. It goes further.
A loss on one virtual digital asset cannot reduce the tax on a gain from another. So a loss on one token does not help with a gain on Bitcoin. Each profitable transfer stands alone.
If you have been netting your crypto results for the year and paying tax on the net figure, talk to a CA. That is one of the most common mistakes in Schedule VDA.
Not against salary, stocks or F&O
Equally, a crypto loss does not reduce tax on anything outside crypto:
- Your salary
- Gains on shares or mutual funds
- Business or professional income
- Rental income or interest
Crypto futures and options are a separate and unsettled question. Commentary after Budget 2025 noted that their classification remains uncertain. If you trade crypto derivatives, do not assume the VDA rules or any other rules apply. Ask a CA.
No carry forward either
A VDA loss cannot be carried forward to later years. If you lose ₹30,000 this year and make ₹30,000 next year, you pay full tax next year.
This is why timing your sales to "use up" losses does not work with crypto in India. There is nothing to use up.
What to still report
Even though losses do not reduce tax, you still report every transfer in Schedule VDA, including the ones where you lost money. Schedule VDA sits in ITR-2 and ITR-3. ITR-1 cannot be used if you have VDA income.
For each sale, enter the date acquired, the date transferred, the head of income, the cost and the sale value. Swaps and spends count as transfers too. Then enter your TDS in the tax-paid section so it is credited.
Why report losses that do not help you? Because the rule is to report every transfer, and because platforms report your activity. It shows in your Annual Information Statement. Since July 2026, CBDT guidance under the Crypto-Asset Reporting Framework has exchanges reporting users' transactions from calendar year 2026 in rupees. A return that leaves out losing sales will not match the data the department holds.
What this means for how you hold
I am not giving you investment advice, and I will not tell you what to buy or when. But I will tell you what the rules reward and what they punish, because that is just arithmetic.
- Every sale is a taxable event, and only winners count. So fewer sales usually means fewer surprises.
- 1% TDS is deducted on every sale value above the threshold, win or lose, and you only get it back at filing. Frequent selling ties up cash.
- Holding is not taxed. Tax arises when you transfer.
- Buying small amounts regularly, rather than trading in and out, keeps your records simple and your taxable events few.
Whatever you do, start with an amount you can afford to see fall, and keep clean records from your first purchase. Crypto is unregulated and can be highly risky, and the tax rules will not soften a bad trade.
Questions to take to your CA
- Should my crypto income be shown as capital gains or business income, and so in ITR-2 or ITR-3?
- Have I reported every transfer, including swaps and spends, for this financial year?
- Does my TDS in Form 26AS and AIS match my platform statements?
- Do I have any crypto derivatives trades that need separate treatment?
- Did I receive any crypto as a gift or airdrop that has its own rules?
The Bitcoin losses guide keeps this rule up to date as the law changes. Read it, then check your own situation with a CA before you file.
Common questions
Can crypto loss be set off against stock gains?
No. A loss on a virtual digital asset cannot be set off against any other income in India, including gains on shares or mutual funds, salary or business income.
Can I carry forward crypto losses?
No. VDA losses cannot be carried forward to later years. A loss this year does not reduce tax on a crypto gain next year.
Do I need to show crypto loss in ITR?
Yes. Report every transfer in Schedule VDA, including losses, swaps and spends. The loss does not reduce tax, but leaving it out creates a mismatch with what platforms report.
Can loss on one coin offset gain on another?
No. The law bars set-off even between different virtual digital assets. Each profitable transfer is taxed at 30% plus cess on its own.