Why crypto losses cannot be set off in India
Under Section 115BBH, a loss from transferring one virtual digital asset cannot be set off against gains from another VDA, cannot be set off against any other income, and cannot be carried forward. Each profitable transfer is taxed on its own.
Most tax systems tax you on net outcome. India's VDA regime does not. This single rule changes how a trading year should be sized.
The rule in numbers
| Trade | Result | Taxable |
|---|---|---|
| Sold USDT | +₹1,00,000 | ₹1,00,000 |
| Sold another asset | −₹1,00,000 | Nil — the loss is simply lost |
| Net outcome | ₹0 | Taxed on ₹1,00,000 → ₹31,200 |
You broke even and still owe ₹31,200. That is not a quirk of the example — it is the design.
30% crypto tax calculator (Section 115BBH)
Gains on virtual digital assets are taxed at a flat 30%, plus 4% cess on the tax — 31.2% effective.
Informational only, not tax advice. Surcharge may apply at higher income levels. Only the cost of acquisition is deductible — no expenses, and a loss on one coin cannot be set off against a gain on another.
What this rules out
- Offsetting a crypto loss against a crypto gain.
- Offsetting a crypto loss against salary, business or capital gains income.
- Carrying a crypto loss forward to a future year.
- Deducting costs other than the cost of acquisition.
What it means practically
For P2P traders in stablecoins the effect is usually modest — you are converting at a spread rather than speculating on price. It bites hardest for people who trade volatile assets frequently, where gross gains and gross losses are both large and only one side counts.
Predictable spreads and clean records make a stablecoin trading year easy to reconcile.
Trade USDT on FastXP2PFrequently asked questions
Can I set off a crypto loss against a crypto gain?
No. Section 115BBH does not permit set-off between virtual digital assets, even within the same year.
Can crypto losses be carried forward?
No. They cannot be carried forward to future years.
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- set-off
- 115BBH