Crypto tax in India: the complete guide for P2P traders

India's crypto tax regime is unusually blunt: a flat rate, almost no deductions, and no loss relief. Once you understand those three facts, the rest is bookkeeping.

The 30% on gains

Section 115BBH taxes income from the transfer of a virtual digital asset at 30%, regardless of your slab and regardless of how long you held it. There is no long-term/short-term distinction. On top of the tax sits the 4% health and education cess, which applies to the tax amount, not the gain — so the effective rate is 31.2%. Surcharge can apply at higher income levels.

What you can deduct: almost nothing

• Cost of acquisition — deductible. What you paid for the crypto.
• Trading fees, platform spread, gas fees, internet, hardware — not deductible.
• Losses on other crypto — cannot be set off against crypto gains.
• Losses at all — cannot be carried forward to a later year.

The 1% TDS is separate

Section 194S deducts 1% at source on the transfer itself, not on your gain. It is not an extra tax — it is a prepayment you claim as credit when you file. On an exchange the platform usually handles it; in a genuine P2P trade the responsibility sits with the buyer. Full detail in the 1% TDS guide.

What to record for every trade

1. 1Date and time of the transfer
2. 2Asset and quantity
3. 3Sale consideration in INR
4. 4Cost of acquisition in INR
5. 5TDS deducted, if any, and by whom
6. 6Counterparty and order reference

Keep it as you go. Reconstructing a year of P2P trades in July is how people end up guessing — and a guess is what turns a tax question into a tax problem. See record keeping for crypto trades.

Filing

VDA income is reported in Schedule VDA of your income tax return, transfer by transfer. TDS already deducted is claimed as credit against your final liability, and can produce a refund if it exceeds the tax due. Walkthrough in Schedule VDA and ITR filing.