Bitcoin and Ether generally face the same Indian virtual digital asset (VDA) transfer-tax rules. Section 115BBH does not set a different rate for one coin: it taxes income from a VDA transfer at 30%, with applicable surcharge and cess, allows the cost of acquisition, and bars deductions for other expenses and losses. A separate 1% tax deduction at source (TDS) may apply to transfer consideration under section 194S, subject to thresholds and transaction details. The law reviewed here is the Income-tax Act, 1961; the Finance Act 2025’s expressly expanded crypto-asset definition takes effect on 1 April 2026. Check the law and return instructions applicable to your transaction dates and assessment year.
Is Bitcoin taxed differently from Ethereum in India?
For an ordinary transfer, the comparison is usually not Bitcoin versus Ether but the circumstances of the transfer: what happened, when it happened, what consideration was received, who paid it, and whether withholding applies. The Income Tax Department’s VDA guidance and section 115BBH do not establish a separate transfer-tax rate for Bitcoin and Ether. Both are crypto-assets within the VDA framework as ordinarily understood.
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| Tax question | Bitcoin | Ether |
|---|---|---|
| Does section 115BBH provide a coin-specific rate? | No separate Bitcoin rate is stated in the official guidance. | No separate Ether rate is stated in the official guidance. |
| Transfer-income rate | 30% under section 115BBH, plus applicable surcharge and cess. | 30% under section 115BBH, plus applicable surcharge and cess. |
| Permitted deduction identified in section 115BBH | Cost of acquisition, if any. | Cost of acquisition, if any. |
| Other expense deductions and transfer-loss treatment | Other expenditure is disallowed; VDA transfer losses cannot be set off against other income or carried forward under section 115BBH. | Other expenditure is disallowed; VDA transfer losses cannot be set off against other income or carried forward under section 115BBH. |
| Potential section 194S TDS | Generally 1% of consideration, subject to the rules and thresholds. | Generally 1% of consideration, subject to the rules and thresholds. |
The Income-tax Act defines “transfer” for section 115BBH to apply to a VDA “whether capital asset or not.” As a result, simply calling Bitcoin or Ether a long-term investment rather than a business asset does not, by itself, take a transfer outside this special rule. Other facts can still matter for return form, timing, and other income.
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The Finance Act 2025 added a crypto-asset definition based on a value representation that relies on a cryptographically secured distributed ledger or similar technology. The Income Tax Department’s section 2 page gives that change an effective date of 1 April 2026. That is a date-specific amendment, not a basis for assuming that every crypto transaction before that date falls outside the VDA provisions: the Department’s VDA framework already covers specified digital assets. For a transaction near a legal change, check the operative provisions for its date and the relevant assessment year.
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What is the crypto tax rate in India?
Section 115BBH sets tax at 30% on income from transfer of a VDA. The Income Tax Department describes the rate as 30% plus surcharge and cess. The figure applies to computed transfer income, not automatically to every rupee of gross sale proceeds. The statutory calculation also adds the tax otherwise chargeable on the taxpayer’s remaining total income, as if the VDA transfer income were removed from total income. Therefore, 30% should not be presented as everyone’s complete final tax bill.
How to work out the amount covered by the 30% rate
For a straightforward transfer where the acquisition cost is established, begin with the consideration for the transfer and subtract the cost of acquisition. Section 115BBH permits that cost, if any. It disallows deductions for other expenditure or allowances when computing this VDA transfer income. Trading fees, network fees, and similar costs should not be assumed deductible under this section merely because they reduced the amount received or were incurred to complete a transaction.
For example, if a taxpayer bought Ether and later sold it for rupees, the section’s basic computation uses the transfer consideration less the acquisition cost. This explains why the taxable income is not necessarily the full sale proceeds. It does not determine the correct value or timing for every transaction type; maintain evidence for both amounts and apply the rules relevant to the particular transaction.
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To illustrate the arithmetic only, if an established acquisition cost is ₹60,000 and consideration for a later transfer is ₹1,00,000, the difference is ₹40,000 before applying the special rate and other parts of the person’s tax computation. This is not a calculation of the final tax bill: surcharge, cess, the rest of the taxpayer’s total income, transaction facts and applicable year’s rules still matter. The example also does not allow transaction expenses to be subtracted from the ₹40,000 under section 115BBH.
Why the tax can differ from a simple 30% calculation
The 30% rate is the special rate on the computed income from transfer. Surcharge and cess may apply, and the Act’s formula also accounts for the tax otherwise chargeable on the person’s remaining income. A reader should distinguish this final income-tax computation from TDS: withholding is collected during a transaction and is not a substitute for calculating the tax due under section 115BBH.
In practical terms, keep the transfer computation separate from the wider return calculation. First identify the VDA transfer income using the permitted acquisition cost; then consider the statutory treatment of that income alongside the tax otherwise chargeable on remaining income. Do not treat a 30% withholding or a platform’s displayed tax figure as proof that all return obligations have been completed.
Can I offset Bitcoin losses against Ethereum profits?
No. Section 115BBH bars setting off a loss from transfer of a VDA against income computed under another provision of the Act, and it also bars carrying that loss forward to later assessment years. The rule applies to VDA transfer losses; it does not create a separate Bitcoin-versus-Ether result.
That means a loss on a Bitcoin transfer cannot be used to reduce positive income from an Ether transfer under this provision. Nor does section 115BBH permit the unused loss to be saved for a later year. Do not apply ordinary capital-gains loss assumptions to these VDA transfers: the special section expressly sets out the restriction.
The restriction is also distinct from the Schedule VDA instruction to show a loss as nil in the schedule’s computation. Reporting the transaction in the schedule does not turn its loss into a deduction or a carry-forward balance. Keep the transaction evidence and report it as instructed, but do not include the negative amount as relief against a profitable transfer.
Why was 1% TDS deducted when I sold crypto?
Section 194S generally requires the person responsible for paying a resident consideration for transfer of a VDA to deduct TDS at 1% of that sum. The Income Tax Department’s TDS rates guidance lists annual aggregate consideration thresholds below which no deduction is required: ₹10,000 for a payer who is not a specified person and ₹50,000 for a specified person. These are thresholds for the TDS mechanism, not tax-free allowances for VDA income.
The Department describes specified persons to include individuals or Hindu undivided families (HUFs) meeting stated prior-year business-turnover or professional-receipt criteria, as well as individuals or HUFs without business or professional income. Whether a threshold applies depends on the payer and the transaction; do not infer it solely from the amount of one sale. Confirm the applicable definition and annual aggregate consideration for the relevant year.
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Because the threshold is expressed by reference to aggregate consideration during the year, a transaction below the relevant figure should not be assessed in isolation from other transfers involving the payer. The section 194S obligation is also framed around payment to a resident. Residency, the payer’s status, the transfer route, and the applicable threshold therefore matter alongside the asset being sold.
Who is responsible for deducting TDS?
The responsible deductor can depend on how the transfer is carried out. The Income Tax Department discusses different possibilities for over-the-counter (OTC) transfers and transfers mediated by an exchange or broker. In an in-kind arrangement, the payment mechanics also need to be examined. The route of the trade can therefore affect who handles withholding, even though Bitcoin and Ether do not have different section 194S rates.
A separate payment connected to crypto can raise a separate withholding question. The Department gives the example of Bitcoin received as payment for services: withholding on the VDA transfer and withholding on the service payment may each be relevant. Do not treat a single 1% deduction as resolving every tax obligation attached to a transaction or the underlying service.
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What a TDS deduction does—and does not—tell you
TDS is a collection and compliance issue tied to consideration and the responsible payer. It is not the final section 115BBH computation and does not turn the 1% into the tax rate on your profit. Keep the transaction details and withholding records so that the amount deducted can be reconciled when preparing the return and determining your overall tax position.
If no TDS appears on a transaction, that alone does not establish that there was no taxable transfer income: the withholding threshold, payer responsibility, or transaction mechanics may explain the absence of a deduction. Conversely, a deduction at source does not by itself establish that the final tax liability equals 1% of consideration. Reconcile withholding records with the transfer and your return rather than using either outcome as a substitute for the other.
Do I have to report every Bitcoin and Ethereum transaction in my ITR?
The Income Tax Department’s Schedule VDA instructions call for transaction-wise information for transfers during the financial year, rather than only a single combined Bitcoin-and-Ether balance. The schedule asks for the transaction serial number, acquisition date, transfer date, tax head, cost of acquisition, and consideration. Its instructions also address cost reporting for a gifted asset.
The Department says to subtract cost of acquisition from consideration, report a loss as nil in the schedule’s computation, and carry positive transaction amounts to the relevant ITR schedule. That schedule treatment does not make the loss available for set-off: section 115BBH separately prohibits set-off and carry-forward. The Department lists Schedule VDA applicability for ITR-2, ITR-3, ITR-5, ITR-6, and ITR-7; which return is appropriate depends on the taxpayer and the rest of their circumstances.
So the reporting task is not just to disclose a closing balance of coins. The schedule asks about transfers in the financial year and their transaction details. Gather the acquisition and transfer information for each reportable event, then use the current return instructions to determine the applicable form and where the aggregate positive amounts belong. The form list is not a recommendation that every taxpayer may choose any one of those returns.
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- Exchange statements and trade confirmations showing the asset, quantity, dates, and consideration.
- Wallet records and transaction identifiers that help establish movements and timestamps.
- Evidence of the acquisition cost and the method used to determine the rupee value of consideration.
- TDS records and related payment documentation, including records for transactions routed through an exchange, broker, or OTC counterparty.
These records are practical support for the fields required by Schedule VDA; they are not a substitute for the applicable statutory instructions. If your exchange or wallet records show amounts in another currency, retain the underlying statements and the valuation working used for the rupee figures entered in the return.
A useful filing check is to compare the transaction history against wallet movements and exchange statements, so a transfer is not overlooked merely because it occurred off-exchange or involved a different coin. Preserve the dates and source records used for the reported figures. For gifted assets, follow the Schedule VDA instructions on cost, while separately checking the rules that may govern taxation when the asset was received.
How do I calculate tax if I exchanged Bitcoin for Ether?
A crypto-to-crypto swap can raise both transfer-tax and valuation questions. Section 115BBH broadly applies to transfers of VDAs, and its statutory definition of transfer applies whether or not the asset is a capital asset. However, the official materials summarized here do not settle the timing and valuation of every Bitcoin-for-Ether exchange or every platform’s transaction mechanics. Do not assume that a swap is tax-neutral simply because no rupees reached your bank account, but do not treat a particular valuation method as settled by these general rules either.
For a swap, preserve the date and time, quantities of both assets, exchange records, fees shown, and any contemporaneous rupee valuation information. Identify what was transferred and what consideration was received, then confirm how those facts should be entered in the relevant year’s return. Since section 115BBH permits the acquisition cost but disallows other expenses, do not automatically deduct exchange or network fees from the statutory computation. Where the rupee value or character of the transaction is uncertain, obtain advice based on the transaction records and applicable law.
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1Repair Windows errors before they cause bigger problems2Fix the driver behind crashes, sound loss and screen glitches3Clear out junk files and repair common Windows errorsFor recordkeeping, treat the two sides of the exchange as facts to document rather than assuming the interface’s coin count is enough. Retain evidence of the Bitcoin disposed of, its acquisition cost, the Ether received, the time of the exchange, and the records supporting any rupee amounts used. Those details help address the schedule’s acquisition-date, transfer-date, cost and consideration fields, but do not settle a valuation method that the official guidance does not specify.
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The shared ordinary-transfer framework does not settle every event involving crypto. The official material discussed above does not fully resolve the tax timing and valuation of mining rewards, staking rewards, DeFi activity, or every crypto-to-crypto exchange. It also does not settle all tax-on-receipt rules for gifts or every donor-recipient relationship. Schedule VDA’s gift-specific cost instructions do not, by themselves, answer whether or how a gift is taxed when received.
Non-resident status, treaty questions, business records, and activity spanning an effective-date change can also affect the analysis. These cases need the specific facts and operative provisions, rather than an assumption that the ordinary buy-and-sell calculation answers them.
That distinction matters when a taxpayer has both a receipt event and a later transfer. A rule for working out cost in Schedule VDA is not a complete answer to whether the earlier receipt is taxable, and the ordinary sale example does not supply the missing timing or valuation rules for rewards or DeFi activity. Keep records for both events and check the provisions that apply to each rather than forcing them into a simple purchase-and-sale model.
Which dates and rules should I check before filing?
The official material discussed here uses section references from the Income-tax Act, 1961, and was reviewed in 2026. The Department’s section 2 page states that the Finance Act 2025 crypto-asset definition insertion takes effect on 1 April 2026. Filing guidance, return schedules, thresholds, and the legislation applicable to a transaction can change. Match each transaction to its date, the relevant financial year and assessment year, and the operative law and ITR instructions for that period before filing.
For a transaction spanning or close to the 1 April 2026 effective date, do not use the amendment date alone to answer every question about the transaction. Confirm the rules operative on the relevant dates, the applicable assessment year, and the current Schedule VDA and return guidance. This is particularly important where the event is not a straightforward sale for rupees.
For a basic resident taxpayer’s ordinary Bitcoin or Ether transfer, the central comparison remains straightforward: the reviewed provisions do not show a coin-specific 115BBH rate. The harder questions are often the permitted acquisition cost, the prohibition on loss relief, whether section 194S withholding applies and who must handle it, and how each transfer is documented and reported.
Frequently Asked Questions
Is Bitcoin taxed differently from Ethereum in India?
For ordinary VDA transfers, the official guidance does not establish a different section 115BBH transfer-tax rate for Bitcoin and Ether. The rate is generally 30% on computed transfer income, with applicable surcharge and cess; transaction facts and the applicable law and year still matter.
What is the crypto tax rate in India?
Section 115BBH sets a 30% rate on income from transfer of a VDA. The cost of acquisition, if any, is allowed, while other expenditure and allowances are disallowed. Surcharge and cess may apply, and the statutory computation also takes account of tax otherwise chargeable on remaining income.
Can I offset Bitcoin losses against Ethereum profits?
No. Section 115BBH bars setting off a VDA transfer loss against income computed under another provision and bars carrying that loss forward. The restriction is not coin-specific.
Why was 1% TDS deducted when I sold crypto?
Section 194S generally provides for 1% TDS on consideration paid to a resident for a VDA transfer, subject to annual aggregate thresholds and the transaction’s withholding responsibilities. The deduction is not the final section 115BBH tax rate.
Do I have to report every Bitcoin and Ethereum transaction in my ITR?
Schedule VDA calls for transaction-wise details for transfers during the financial year, including dates, tax head, cost and consideration. Use the current return instructions and the appropriate ITR form for your circumstances; the Department lists ITR-2, ITR-3, ITR-5, ITR-6 and ITR-7 as forms with Schedule VDA.
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A crypto-to-crypto exchange can raise transfer, timing and valuation questions. Section 115BBH applies broadly to VDA transfers, but the official materials discussed here do not settle the timing and valuation of every swap. Keep records of both assets, dates, acquisition cost, consideration and valuation information, and confirm the treatment for the facts and applicable year.
Are the ₹10,000 and ₹50,000 thresholds tax-free limits for crypto gains?
No. They are annual aggregate consideration thresholds in the section 194S TDS guidance: ₹10,000 for a payer who is not a specified person and ₹50,000 for a specified person. They are not tax-free allowances for VDA transfer income.
The Bottom Line
For ordinary transfers, Bitcoin and Ether share the same central Indian VDA framework: section 115BBH applies a 30% rate to computed transfer income, allows acquisition cost, and bars other expense deductions and VDA loss set-off or carry-forward. Section 194S may separately require 1% TDS, depending on thresholds, residency and who is responsible for withholding. Keep transaction-wise records and verify the law and return instructions for the relevant dates and assessment year.
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