Last reviewed: 25 September 2026. Deadline position: the 31 July and 31 August 2026 due dates for AY 2026-27 have passed. If you have not filed, file a belated return by 31 December 2026; the Section 234F late fee and Section 234A interest on unpaid tax apply. A filed return can be revised until 31 March 2027. Crypto is one of the easiest places to slip up on either deadline. The core rules are unchanged — a flat 30% on gains and a 1% TDS on transfers — but the reporting net around them has tightened sharply: exchanges now report your trades to the department, crypto counts as a "financial asset" for information exchange, and undisclosed crypto found in a search invites the harshest block-assessment rates. This guide covers the current law, worked numbers, the TDS thresholds, what changes under the Income-tax Act, 2025, and what a late return costs. Returns for AY 2026-27 (FY 2025-26) are filed under the 1961 Act, so the 1961 sections below apply to them; the 2025 Act sections are given alongside for FY 2026-27 transactions.
Quick answer
Missed the 31 August 2026 due date? What it costs a crypto filer
If your crypto trading was business income reported in ITR-3 (or you used presumptive ITR-4), 31 August 2026 was your due date; for ITR-2 it was 31 July. The 30% crypto tax and 1% TDS credit computation does not change because you file late — but these things do:
| Consequence | Rule | Practical effect for a crypto filer |
|---|---|---|
| Late-filing fee | Section 234F | ₹5,000 if total income exceeds ₹5 lakh (₹1,000 if not), charged on any return filed after the due date |
| Interest on unpaid tax | Section 234A | 1% per month (part-month counted as full) on self-assessment tax still unpaid, running from the day after the due date — this bites hardest when a large 30% crypto liability is outstanding after TDS credit |
| Loss carry-forward | Section 139(3) | Crypto losses were never carry-forward eligible anyway, but a late ITR-3 also forfeits carry-forward of any other business loss or short-term capital loss you may be reporting alongside the crypto entries |
| Last window | Section 139(4) | A belated return stays open until 31 December 2026 — file it rather than skip the year entirely; an ITR-U is still available later but carries additional tax |
Practically: pay the estimated self-assessment tax now, even if the return needs a few more days — that stops the 234A interest clock regardless of when the return is actually filed.
The 30% rule, transaction by transaction
Section 115BBH taxes every gain on the transfer of a virtual digital asset at a flat 30% plus applicable surcharge and 4% health and education cess — regardless of holding period, with only the cost of acquisition deductible. There is no indexation, no long-term concession, and the Section 87A rebate does not apply: even if your total income is under the ₹12 lakh rebate threshold, crypto gains are still taxed at 30%. Your salary and other income continue to be taxed at normal slab rates alongside.
| Transaction | Tax treatment |
|---|---|
| Sell crypto for INR | 30% on (sale consideration − cost of acquisition) |
| Swap one crypto for another | Taxable transfer — 30% on the gain, measured at fair market value on the swap date |
| Receive crypto as a gift | Taxable as income from other sources at slab rates if the aggregate exceeds ₹50,000 in a year, subject to the usual exemptions for relatives and specified occasions |
| Airdrops, staking and mining rewards | Generally taxed at slab rates on fair market value at receipt; a later sale attracts 30% on the further gain. Cost-basis positions vary — document the receipt-date value |
| Simply holding | No tax on unrealised gains — but holdings on foreign platforms may need Schedule FA disclosure in the ITR |
The 1% TDS: thresholds, forms and credit
Under Section 194S, 1% TDS applies on the transfer of VDAs once consideration in a financial year crosses ₹50,000 for specified persons (individuals/HUFs with no business income, or with business turnover up to ₹1 crore or professional receipts up to ₹50 lakh) and ₹10,000 for everyone else. For payments from 1 April 2026 (FY 2026-27), the same 1% and thresholds apply under section 393(1), Table S.No. 8(vi) of the Income-tax Act, 2025. On Indian exchanges the platform deducts it; in a P2P or direct deal, the buyer must deduct and deposit it. For FY 2025-26 deals that was through Form 26QE within 30 days of the month-end, with Form 16E issued to the seller. For deals from 1 April 2026 the buyer reports in the common challan-cum-statement Form 141, which replaces Forms 26QB, 26QC, 26QD and 26QE; check the successor to Form 16E under the Income-tax Rules, 2026 before issuing the certificate. If PAN is not furnished, the rate jumps to 20%. Remember: the 1% is not your final tax — it is a credit. Reconcile it in Form 26AS/AIS before filing and claim it against the 30% liability.
A worked example
Rohan, a salaried resident, earns ₹9.6 lakh salary in FY 2025-26. He bought Bitcoin for ₹4,00,000 and sold it for ₹5,20,000, and separately booked a ₹40,000 loss on another token.
| Step | Amount |
|---|---|
| Gain on Bitcoin (5,20,000 − 4,00,000) | ₹1,20,000 |
| Tax at 30% | ₹36,000 |
| Add: 4% cess | ₹1,440 |
| Tax on crypto (before TDS credit) | ₹37,440 |
| Loss on other token — set-off / carry-forward | Nil allowed; the ₹40,000 loss simply lapses |
| TDS already deducted by exchange (1% of ₹5,20,000) | ₹5,200 — claim as credit; balance payable ₹32,240 |
His salary is taxed at slab rates separately; no rebate or slab benefit touches the crypto tax.
NRIs and crypto held abroad
A non-resident's VDA gains taxable in India are taxed at the same 30%, but section 194S covers only payments to residents. When an Indian buyer or platform pays a non-resident for a VDA transfer, TDS falls under section 195 (section 393(2) from 1 April 2026), generally at 30% plus surcharge and cess rather than 1%. Residents who hold crypto on foreign exchanges or in foreign custody should consider Schedule FA disclosure; with crypto now a financial asset for CRS and CARF expected from 2027, offshore holdings are increasingly visible. Our CA for NRIs service handles NRI returns and remittances.
What has changed in the last year
| Change | Effective | Why it matters |
|---|---|---|
| VDAs included in "undisclosed income" for search/block assessments (Finance Act, 2025) | 1 Feb 2025 | Undisclosed crypto found in a search can be taxed at 60% plus penalty — far worse than voluntary disclosure |
| VDA definition widened to any crypto-asset relying on a cryptographically secured distributed ledger | AY 2026-27 | Newer token structures fall squarely within the 30% net |
| Crypto-assets treated as "financial assets" for FATCA/CRS reporting (Rules 114F–114H amended) | 1 Jan 2026 | Foreign-held crypto information flows to Indian authorities |
| Exchanges and prescribed entities must report crypto transactions under Section 285BAA (section 509 of the 2025 Act), with the prescribed details in the Income-tax Rules, 2026 (Notification No. 22/2026, G.S.R. 198(E) dated 20 March 2026) | 1 Apr 2026 | The department sees your trades independently of your ITR — mismatches trigger verification notices |
| Income-tax Act, 2025 replaces the 1961 Act: Section 115BBH becomes Section 194, Section 194S TDS moves into Section 393(1), Table S.No. 8(vi), Section 285BAA becomes Section 509 | 1 Apr 2026 (tax year 2026-27) | Same 30% / 1% substance, new section numbers on notices and forms filed from FY 2026-27 |
| OECD Crypto-Asset Reporting Framework (CARF) | Targeted from 1 Apr 2027 | Automatic exchange of offshore crypto account data with India is expected to begin |
Filing checklist for AY 2026-27
- Use ITR-2 (investor) or ITR-3 (trading as business) — never ITR-1/ITR-4 with VDA income.
- Fill Schedule VDA transaction-wise: date of acquisition, date of transfer, cost and consideration for each transfer.
- Reconcile exchange statements, wallet history, Form 26AS/AIS and TDS certificates (16E) before filing — mismatches are the top notice trigger.
- Evaluate Schedule FA disclosure for crypto held on foreign platforms or in foreign custody.
- ITR-2 (investment-only crypto) was due 31 July 2026; ITR-3/ITR-4 (business income, including most active crypto traders) was due 31 August 2026. Both dates have passed: a belated return is possible up to 31 December 2026 with late fee under Section 234F and interest under Section 234A on unpaid tax.
- Missed reporting crypto in earlier years? An updated return (ITR-U) may allow voluntary correction with additional tax — far safer than waiting for a notice.
Common mistakes we see
- Assuming small gains are tax-free because total income is below the rebate limit — the 87A rebate never covers VDA tax.
- Netting losses against gains across coins — the law taxes each gain gross.
- Ignoring crypto-to-crypto swaps because "no money was withdrawn" — each swap is a taxable transfer.
- P2P purchases with no TDS — the buyer was required to deduct and file Form 26QE (Form 141 from 1 April 2026).
- No fair-market-value documentation for swaps, airdrops or staking rewards.
- Foreign-exchange holdings left out of the ITR — now visible through CRS reporting and, from 2027, CARF.
Frequently asked questions
I missed the 31 August 2026 due date for ITR-3 with crypto income. What now?
File a belated return by 31 December 2026. A late fee under Section 234F (₹5,000, or ₹1,000 if total income is under ₹5 lakh) applies, along with 1% per month interest under Section 234A on tax unpaid after the due date. Filing late also forfeits carry-forward of other business or short-term capital losses reported in the same return, though crypto losses were never carry-forward eligible. Pay the self-assessment tax now to stop the interest running. A revised return can be filed until 31 March 2027.
How is crypto taxed in India for AY 2026-27?
Gains on virtual digital assets are taxed at a flat 30% plus applicable surcharge and 4% cess under Section 115BBH, with only the cost of acquisition deductible. From tax year 2026-27, the same treatment continues under Section 194 of the Income-tax Act, 2025.
What is the threshold for 1% TDS on crypto under Section 194S?
TDS applies once payments for VDA transfers cross ₹50,000 in a financial year for specified persons (most small individual traders) and ₹10,000 for others. The same 1% and thresholds apply for FY 2026-27 under section 393(1), Table S.No. 8(vi) of the Income-tax Act, 2025. Indian exchanges deduct it automatically; in P2P deals the buyer must deduct and deposit it, using Form 26QE for FY 2025-26 and the common challan-cum-statement Form 141 from 1 April 2026.
Can I set off crypto losses against gains?
No. Loss from one VDA cannot be set off against gain from another VDA or any other income, and it cannot be carried forward. Each profitable trade is taxed on its own.
Which ITR form should crypto investors use?
ITR-2 if your crypto activity is investment in nature, ITR-3 if it amounts to a business. ITR-1 and ITR-4 cannot be used once you have VDA income, and every transfer must be itemised in Schedule VDA.
Does the tax department know about my crypto trades?
Increasingly, yes. The 1% TDS trail feeds your AIS, and from 1 April 2026 crypto exchanges and other reporting entities must report transactions to the department under Section 285BAA (Section 509 of the new Act). Visibility of offshore holdings is also being expanded through CRS, with the OECD crypto framework (CARF) targeted from 2027.
My total income is below ₹12 lakh. Is my crypto gain tax-free?
No. The Section 87A rebate does not apply to VDA income, so the 30% tax is payable on crypto gains even if your total income is within the rebate limit.
How is an NRI's crypto taxed in India?
The 30% rate applies to a non-resident's VDA gains taxable in India too, but the 1% TDS under section 194S covers only payments to residents. A payment to a non-resident for a VDA transfer is subject to TDS under section 195 (section 393(2) from 1 April 2026), generally at 30% plus surcharge and cess. Residents holding crypto on foreign exchanges should also consider Schedule FA in the ITR.
We reconcile exchange and wallet data, compute the 30% tax and 1% TDS credit, prepare Schedule VDA and handle department verification queries.
Crypto AdvisoryIncome Tax FilingContact UsTalk to CA Somesh Chandak & Associates — we handle crypto tax computation, reporting and notice replies.
WhatsAppLinkedInSchedule a callDisclaimer: This article is for general guidance only and is not a substitute for advice on your specific facts. Figures and due dates verified as on 25 September 2026; please confirm the latest position on the e-filing portal before filing.