Section 115BBH explained: the 30% crypto tax and where it is now
What Section 115BBH says about crypto tax in India, the flat 30% rate, no loss set-off, worked examples, and where the rule sits in the Income-tax Act 2025.
- Tax year 2026–27
Search "crypto tax India" and almost every result mentions Section 115BBH. It's the provision that introduced India's flat 30% crypto tax in 2022. Here's what it says in plain English, how it works with real numbers, and where the rule lives now that India has a new Income-tax Act.
Where Section 115BBH came from
The Finance Act, 2022 added Section 115BBH to the Income-tax Act, 1961, effective from the financial year 2022-23 (1 April 2022). It created a separate tax regime for virtual digital assets (VDAs), which include cryptocurrencies, NFTs and similar tokens. Before this, crypto gains were taxed under general rules, with lots of uncertainty.
What it says, in plain English
- Flat 30% rate. Income from transferring a VDA is taxed at 30%, plus 4% health and education cess, so effectively 31.2%. Surcharge can also apply at higher incomes.
- Only the cost of buying is deductible. You can subtract what you paid for the asset. You can't deduct trading fees, GST, internet bills or any other expense.
- No set-off of losses. A loss on one VDA can't reduce a gain on another VDA, and can't reduce any other income such as salary.
- No carry-forward. VDA losses don't move to the next year.
- The rate applies regardless of your income. Even if your total income is below the basic exemption limit, VDA income is taxed at 30%.
Worked example
During the year you:
- sell Bitcoin bought for ₹1,00,000 at ₹1,60,000, a gain of ₹60,000, and
- sell a memecoin bought for ₹40,000 at ₹10,000, a loss of ₹30,000.
Under Section 115BBH:
| Amount | |
|---|---|
| Taxable VDA income | ₹60,000 (the loss is ignored) |
| Tax at 30% | ₹18,000 |
| Cess at 4% | ₹720 |
| Total tax | ₹18,720 |
If you'd paid ₹500 in exchange fees on these trades, you still couldn't deduct them. The 1% TDS deducted by your exchange on the sale values counts towards this tax. See TDS and refunds.
What counts as a "transfer"
Transfer is read broadly. It covers:
- selling crypto for rupees,
- swapping one crypto for another (each swap is a transfer of the coin you gave up),
- spending crypto on goods or services.
Moving crypto between your own wallets isn't a sale. See crypto swaps and Schedule VDA.
Where the rule sits now: the Income-tax Act, 2025
The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026. The VDA rules carried over unchanged, but the numbering changed:
| Rule | Income-tax Act, 1961 | Income-tax Act, 2025 |
|---|---|---|
| 30% tax on VDA transfers | Section 115BBH | Section 194 |
| 1% TDS on VDA transfers | Section 194S | Section 393(1) |
So for a sale on or after 1 April 2026, the correct reference is section 194 of the new Act. Many apps and guides still say 115BBH; the substance is the same. Full map: crypto tax under the Income-tax Act, 2025.
How to report it
Report each transfer in Schedule VDA of your ITR: date of acquisition, date of transfer, cost and sale value. Most people with crypto gains use ITR-2, or ITR-3 if they have business income. See the Schedule VDA guide and ITR-2 or ITR-3.
Common mistakes
- Netting losses against gains before reporting.
- Deducting fees from the gain.
- Forgetting swaps and only reporting rupee sales.
- Assuming the 30% doesn't apply because total income is low.
Work out your own numbers with the crypto tax calculator. For your specific situation, check with a chartered accountant.
Frequently asked questions
Does Section 115BBH still apply?
It applies to transfers made up to 31 March 2026 under the Income-tax Act, 1961. For transfers from 1 April 2026, the same rule is in section 194 of the Income-tax Act, 2025. The rate and the no-set-off rule didn't change.
Can I deduct exchange fees or GST under Section 115BBH?
No. Only the cost of acquisition is deductible. Trading fees, GST on fees, internet costs and similar expenses can't be deducted.
Does the 30% apply if my income is below the basic exemption limit?
Yes. VDA income is taxed at the special rate of 30% plus cess regardless of your other income. The basic exemption limit doesn't reduce it.
Can I carry forward a crypto loss to next year?
No. Losses from transferring VDAs can't be set off against any income and can't be carried forward.
Is staking or airdrop income taxed under Section 115BBH?
The 30% rule is for income from transferring VDAs. Tokens received as income, like airdrops or staking rewards, are commonly taxed as other income at your slab rate when received; selling them later falls under the 30% rule.
Sources
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