The rule
Section 115BBH allows only the cost of acquisition as a deduction and bars set-off of VDA losses against any other income. It also bars carrying a loss forward to later years. In practice, a loss on one coin cannot reduce the tax on a gain on another coin, and a loss this year cannot reduce next year's tax.
Example
You sell one asset at a ₹40,000 gain and another at a ₹30,000 loss. Tax is 30% of ₹40,000 = ₹12,000, plus cess. The ₹30,000 loss does not reduce it.
What this means in practice
- Selling to "book a loss" gives no tax benefit.
- Frequent trading is costly because each gain is taxed in full and each loss is wasted, before fees and 1% TDS.
- A long-term plan with few sales sidesteps most of the friction. That is one reason many people use a Bitcoin SIP.
Sources: Income Tax Department of India and the Finance Act 2022 (inserted sections 115BBH, 194S and 2(47A) into the Income-tax Act, 1961). The Income-tax Act, 2025 applies from 1 April 2026 and renumbers sections; the rules described here are carried over in substance, but check the current numbering with your CA.
General information, not tax or legal advice. Rules change and your situation may differ. Check your own return with a chartered accountant.
Common questions
Can I carry forward a Bitcoin loss?
No. VDA losses cannot be carried forward to later years.
Can a loss on one crypto offset a gain on another?
No. The law bars set-off even between different virtual digital assets.
Risk: Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. Everything here is education, not investment, tax or legal advice.