Crypto tax in India 2026: what changed under the Income-tax Act, 2025 on 1 April

Crypto tax rates in India did not change in 2026. Gains from transferring virtual digital assets are still taxed at a flat 30%, plus surcharge and 4% cess, with only the cost of acquisition deductible. Losses still cannot be set off against other income or carried forward. TDS is still 1%. What changed on 1 April 2026 is the law the rules sit in: the Income-tax Act, 2025 replaced the 1961 Act and renumbered sections, so the crypto TDS that used to be section 194S is now covered by section 393(1).

The other big change is reporting. The Finance Act 2025 added a duty for exchanges and other reporting entities to furnish crypto transaction information, widened the definition of VDA, and brought VDAs into block assessments of undisclosed income. And the Crypto-Asset Reporting Framework now requires exchanges to report 2026 transactions in detail. The money rules are the same. The paperwork is much tighter.

The new Act in one paragraph

The Income-tax Act, 2025 took effect on 1 April 2026 and replaced the Income-tax Act, 1961. It reorganises and renumbers the law. For crypto, the substance was carried over. As our own tax guide puts it, the rules described there are carried over in substance, but check the current numbering with your CA.

When the headlines said "new tax law", a lot of people I know assumed crypto tax had gone up, or that something had been banned. Neither happened. The headline scared people. The rules underneath stayed put.

What stayed the same: 30%, 1%, no set-off

• 30% flat tax on gains. Income from transferring a VDA is taxed at a flat 30%, introduced under section 115BBH of the 1961 Act, plus applicable surcharge and 4% cess. Only the cost of acquisition is deductible. No other expenses or allowances.
• No set-off, no carry forward. VDA losses cannot be set off against any other income and cannot be carried forward. A loss on one coin cannot reduce tax on a gain on another coin.
• 1% TDS. The payer deducts 1% of the consideration paid to a resident for a VDA transfer.
• Schedule VDA. VDA income is reported in Schedule VDA, in ITR-2 or ITR-3. ITR-1 cannot be used with VDA income.

A worked example from the site: you gain ₹40,000 on one asset and lose ₹30,000 on another. Tax is 30% of ₹40,000, which is ₹12,000, plus cess. The ₹30,000 loss does not reduce it.

I will not give you the new section number for the 30% charge. The sources I have seen do not agree on it, and I would rather tell you to ask your CA than print something wrong.

Section 194S is now section 393(1)

Under the Income-tax Act, 2025, TDS on VDA transfers that used to sit in section 194S is now covered by section 393(1), Table Sl. No. 8(vi). In substance:

• The rate is still 1%.
• No TDS if total consideration in the financial year stays within ₹50,000 where the payer is a "specified person", or ₹10,000 for any other payer.
• A "specified person" is an individual or HUF with business turnover up to ₹1 crore or professional receipts up to ₹50 lakh in the previous year, or with no business or professional income.
• The buyer deducts. An exchange may deduct. In peer-to-peer deals, the buyer is responsible.
• If PAN is not furnished, the rate is 20%.

TDS deducted shows in your Form 26AS and AIS and counts toward your tax. Enter it in the tax-paid section of your ITR so it is credited. It is not a fee. The TDS guide explains it in detail.

New reporting by exchanges

This is where 2026 is different in practice.

Finance Act 2025, effective 1 April 2026

• Section 285BAA. Prescribed reporting entities, including exchanges, must furnish information on crypto-asset transactions.
• A wider definition. The VDA definition in section 2(47A) was widened to include crypto-assets that use cryptographic security and distributed ledger technology.
• Block assessments. VDAs were added to undisclosed income for block assessments, which apply after search and seizure.
• Unchanged. The 30% tax and 1% TDS.

The Crypto-Asset Reporting Framework

Section 509 of the Income-tax Act, 2025, together with Rules 241 to 244 of the Income-tax Rules, 2026, implements the OECD's Crypto-Asset Reporting Framework, known as CARF. CBDT issued guidance in July 2026. In short:

• It applies to transactions from calendar year 2026.
• Reporting crypto-asset service providers file Form 167 by 31 May of the following year.
• Exchanges must confirm users' tax residency, report acquisitions, disposals, crypto-to-crypto trades and transfers in rupees, aggregate transfers to unidentified external wallets, and keep wallet addresses for at least seven years.

For you, CARF creates no new tax and no new filing duty, and it does not decide whether crypto is legal. But the department will have transaction-level data, so your ITR should match what your exchange reports.

There is context for why the department is tightening this. According to coverage of FIU-IND's 2024-25 annual report, tax authorities identified about ₹888.82 crore of undisclosed VDA income.

What this means if you hold Bitcoin

When we started Unocoin in 2013, I remember about 30 people from the tax department showing up at our office around the third day of business. We had two employees. I learned then that the state would always pay close attention to Bitcoin, and that the only sane response was clean records.

That lesson matters more now. In 2026, the gap between what you report and what the department can see is closing. That is fine if you report properly. It is a problem only if you do not.

Practically:

• Keep every purchase record, with date and cost, because only the cost of acquisition is deductible.
• Report every transfer in Schedule VDA, including swaps, spends and losses. Do not net losses against gains.
• Match your TDS against 26AS and claim it.
• Keep records of transfers to your own wallets.
• If you are an audit case for AY 2026-27, note that the ITR due date has been moved to 21 November 2026.

What to ask your CA

1. Under the new Act, which sections now apply to my VDA income, and do any change how I file?
2. Is all my VDA activity, across every platform, in Schedule VDA?
3. Does my TDS in 26AS match my platform statements, and is it claimed?
4. Do I have airdrops, staking rewards or gifts that need different treatment?
5. Will my 2026 transactions, as exchanges will report them under CARF, match what I file?

None of this is investment advice, and tax depends on your full situation. Check with a CA.

Three misreadings I keep hearing

"The new Act raised crypto tax." It did not. The 30% rate, the cess, the no set-off rule and the 1% TDS carried over.

"Section 194S is gone, so there is no TDS." The section number changed. The TDS did not. It now sits under section 393(1).

"CARF means I have to file a new form." You do not. Exchanges file Form 167. You keep filing Schedule VDA in ITR-2 or ITR-3, and it should match what they report.

For every rule in one place, with examples, read the full tax guide, and when you file, use the column-by-column Schedule VDA guide.

Keep reading

Sources

• TDSMAN on section 393(1)
• Business Today on Budget 2025 VDA changes
• Inc42 on CARF guidance
• KPMG on India CARF implementation
• Patron Accounting on Income-tax Act, 2025
• TaxGuru on VDA taxation
• ClearTax crypto tax guide
• IndiaBitcoin losses guide
• Cyril Amarchand on FIU-IND annual report
• Angel One on revised AY 2026-27 deadlines