Crypto in India 2026: What You Can Legally Buy, the 30% Tax You Owe, and the Real Risks

In India, crypto is legal to buy, sell and hold, but it is not legal tender, and the crypto tax india 2026 rules are heavy. Any profit you make is taxed at a flat 30% plus 4% cess (a surcharge can also apply), and a 1% TDS is cut at the time of sale. You cannot deduct any costs except what you paid to buy the coin, and you cannot use crypto losses to lower any other tax.

Crypto in India is treated as a Virtual Digital Asset (VDA), a category brought in by the Finance Act, 2022. So you can legally use registered Indian exchanges to buy coins like Bitcoin and Ethereum. There is still no single, full crypto law passed in Parliament. Instead, several bodies watch over it: exchanges must register with the FIU-IND and follow strict KYC and anti-money-laundering checks under the PMLA, while the RBI and SEBI still shape policy and a wider rulebook is under discussion.

The tax is the part most people get wrong. Under Section 115BBH, your gain (sale price minus buy price) is taxed at 30%, whether you held the coin for one day or three years. The 1% TDS under Section 194S is taken on the sale value, not just the profit. For most ordinary individuals this TDS kicks in once your crypto sales cross Rs 50,000 in a year, while for some others, such as those with larger business income, the limit is just Rs 10,000. The worst part: if you lose money on one coin, you cannot set that loss off against gains on another coin, or carry it forward.

Reporting is getting much tighter. For FY 2025-26 you must declare your crypto in Schedule VDA inside ITR-2 or ITR-3. From April 1, 2026, under new Section 285BAA, Indian exchanges share your transaction data straight with the Income Tax Department, so hiding trades is risky. Wrong or missing details can draw a penalty of up to Rs 50,000, and crypto income found in a tax search can be treated as undisclosed income and taxed at 60% (plus penalty) under the block assessment rules.

The real risks go beyond tax. Prices swing wildly, scams are common, and there is no government safety net if an exchange fails or your wallet is hacked. Unlike a bank deposit, your money is not insured. Treat crypto as high risk, only put in what you can afford to lose, and keep clean records of every buy and sell. This is general information, not financial or tax advice. Check the official Income Tax Department site or a qualified advisor before you act.

Crypto is legal in India but taxed hard: 30% on gains, 1% TDS, no loss set-off, and full reporting from April 2026.