GST vs Income Tax on Cryptocurrency in India (2026): 30% Tax, 1% TDS & GST Rules Explained

GST vs income tax on cryptocurrency in India 2026 trips up almost everyone I talk to, and it's not because the rules are hidden somewhere obscure. It's because there are three separate things happening at once: a flat 30% tax on whatever you profit, a 1% TDS that gets pulled out before the money even reaches you, and an 18% GST sitting quietly on your exchange fees. Most articles cover one of these and call it a day. Here's all three, with actual numbers, not just percentages floating in the air.

What Actually Counts as a "Virtual Digital Asset"

Section 2(47A) of the Income Tax Act lumps Bitcoin, Ethereum, every altcoin you can think of, and NFTs into one bucket called Virtual Digital Assets, or VDAs. Doesn't matter if you're searching "crypto trading income tax India" or "NFT tax India," the law doesn't distinguish. If it's a token or code generated through cryptography and isn't a real currency, it's a VDA, and it gets taxed the same way regardless of what it's called on your exchange app.

The 30% Rule on Crypto Profit (Section 115BBH)

This is where people usually get caught off guard. Any profit from selling, swapping, or even spending crypto gets taxed at a flat 30%, and it doesn't matter how long you held it or which income bracket you're in. A college student who just started investing pays the same rate as someone earning ₹50 lakh a year.

A few things make this rule harsher than it sounds at first:

You can only deduct the cost of acquisition, not exchange fees, not gas fees, not the advisory call you paid for.

Lose money on one coin and profit on another? Can't net them off. Section 115BBH treats each gain in isolation.

Losses don't carry forward either. Whatever you lose this year, you lose for good, tax-wise.

A 4% cess sits on top of the 30%, and surcharge kicks in if your total income crosses the relevant threshold.

Say you bought Bitcoin for ₹80,000 and sold it for ₹1,20,000. That's a ₹40,000 profit. Same year, you also lost ₹15,000 trading some altcoin. You'd think the net gain is ₹25,000, right? Wrong. You pay 30% on the full ₹40,000. The loss just sits there, unusable.

1% TDS on Crypto Transactions (Section 194S)

Separate from the 30% tax, exchanges deduct 1% TDS the moment you sell above a certain threshold. It's not a fresh tax, more like a deposit against what you'll owe later, and it shows up in your Form 26AS when you file.

The threshold changes based on who you are:

On Indian exchanges like CoinDCX or WazirX, this deduction happens automatically. Peer-to-peer deals are trickier. There, the buyer is on the hook for deducting and depositing the TDS, and a lot of people skip this without realizing they're now liable for the shortfall, plus interest.

GST on Crypto - What Gets Taxed and What Doesn't

Here's the confusion I hear most often: no, GST isn't charged on the crypto itself. You're not paying 18% every time you buy or sell Bitcoin. What actually gets taxed is the service, meaning the trading fee, withdrawal fee, or commission your exchange charges for facilitating the trade. That fee carries 18% GST, same as most financial services in India.

So if your exchange charges ₹100 in trading fees, about ₹18 of that is GST, added by the platform, not something you calculate or pay separately. It doesn't touch your income tax filing at all, but if you're trading often, those fees (and the GST riding on top) add up more than people expect.

GST vs Income Tax on Crypto, Side by Side

Reporting Crypto Income in Your ITR

Every crypto transaction, whether it made you money or lost it, needs to be reported individually under Schedule VDA, either in ITR-2 for capital gains or ITR-3 for business income. If you're an occasional investor, ITR-2 is usually the simpler path. If you're trading often enough that it looks like a business, expect the tax department to lean toward ITR-3.

You'll need the date of acquisition, date of transfer, cost, sale value, and the resulting gain or loss for each transaction. Just handing over a net profit figure from your exchange statement isn't enough, and it's one of the more common reasons people get notices.

Mistakes I See People Make Repeatedly

Assuming TDS already deducted means the tax is "done." It's just a credit, not the final bill.

Trying to net gains and losses across different coins before reporting, which Section 115BBH doesn't allow.

Forgetting that crypto received as a gift, mining reward, or staking payout is taxed separately, at the time you receive it.

Ignoring P2P trades because no exchange was involved, when the buyer's TDS obligation still applies.

FAQs

Q1. Is cryptocurrency legal in India in 2026?
Yes. There's no ban on holding, buying, or selling crypto. It's taxed heavily, but it's not illegal, and there's no special license required for individual investors.

Q2. How much tax do I pay on crypto profit in India?
A flat 30%, plus 4% cess. No deductions apart from what you originally paid to acquire it.

Q3. Do I owe tax if I move crypto between my own wallets?
No. That's not a "transfer" under tax rules, so it doesn't trigger income tax or TDS.

Q4. Is GST charged when I buy Bitcoin?
No. GST only applies to the service fee your exchange charges, not the value of the crypto.

Q5. Can I offset crypto losses against my salary?
No. Crypto losses stay isolated and can't touch salary, business income, or any other asset class.

Q6. Which ITR form do I use for crypto?
ITR-2 for capital gains treatment, ITR-3 for business income. Both need Schedule VDA filled in.

Q7. Is the 1% TDS an extra tax on top of the 30%?
No, it's an advance deduction. It gets credited against your final 30% liability when you file.

Author Bio

Vishnu Sain is an SEO Executive at LegalDev, specializing in SEO strategy, content optimization, and creating user-focused content around GST, taxation, registration, and business compliance topics. He works on making complex regulatory updates easier to understand through clear, practical, and search-optimized content. His focus is helping businesses and professionals stay updated with changing GST rules and improve their digital visibility through high-quality informational content.