For a taxable transfer of Ethereum in India, calculate the transfer income as the consideration received minus the documented cost of acquiring the Ethereum, then apply the special 30% rate under section 115BBH of the Income-tax Act, 1961. Trading fees, gas charges and other expenses are not deductible under that provision. A loss from a virtual digital asset (VDA) transfer cannot be set off against other income or carried forward. The 30% rate applies to the VDA-transfer income, not automatically to your salary, interest or other income.
You must report each transfer in the applicable income-tax return, with its acquisition date, transfer date, income head, acquisition cost, consideration and resulting income. The following method is a practical framework for India’s AY 2026–27 forms; unusual receipt events, non-resident status and complex business arrangements require transaction-specific advice.
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The calculation in one view
For each Ethereum disposal that legally counts as a transfer:
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- Establish the consideration received and the rupee value supported by your records.
- Subtract only the allowable cost of acquisition, if any.
- Apply 30% to the resulting VDA-transfer income.
- Calculate tax on your other income separately under the rates applicable to your facts, then add any applicable surcharge and health and education cess.
Do not use an assumed rupee conversion rule. The relevant return form asks for acquisition cost and consideration, but the Income Tax Department’s cited form and statutory excerpts do not provide a complete conversion method for every foreign-currency, token-swap or valuation situation. Keep evidence for the exchange rate and valuation you use.
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What section 115BBH taxes
Section 115BBH applies when total income includes income from the transfer of a virtual digital asset. It applies whether or not the VDA is treated as a capital asset. Ethereum transactions therefore need to be examined as VDA transfers first; classification as business or capital gain affects the reporting head, not the special-rate rule.
The provision has two separate parts:
- VDA-transfer income: taxed at 30%.
- All remaining income: removed from the VDA calculation and taxed under the provisions otherwise applicable to that income.
Thus, “crypto is taxed at 30%” is incomplete. The special rate does not convert your entire return into 30%-taxed income. Your salary, interest, rent and other taxable receipts continue to follow their own rules, while surcharge and cess can affect the final bill.
The special rate was inserted by the Finance Act 2022 and is shown as effective from 1 April 2023 on the Income Tax Department’s section 115BBH page. That date helps distinguish the statutory regime from older assumptions about how crypto transactions might be taxed; it does not change the need to identify the relevant transfer and compute it from its records.
Step 1: Identify every transfer
Build a transaction list rather than calculating only the withdrawals that reached your bank account. The AY 2026–27 Schedule VDA treats each transfer as a transaction and asks for transaction-level dates and amounts.
Transactions to investigate
- Ethereum sold for Indian rupees or another fiat currency.
- Ethereum exchanged for another token or asset, where the facts and law treat the event as a transfer.
- Ethereum moved through multiple wallets or platforms when the movement is more than a non-disposal transfer and legally constitutes a transfer.
- Any other disposal or event that the applicable law treats as a transfer.
A wallet-to-wallet movement that you continue to own may have a different result from a sale or exchange. Do not label every blockchain movement a taxable disposal, but do not omit a taxable exchange merely because no rupees were withdrawn. Obtain advice where the legal character of a swap, migration or settlement is uncertain.
Review the full activity history across exchanges and wallets before deciding which events to include. A bank statement can help reconcile fiat deposits and withdrawals, but it will not necessarily show a token-for-token exchange or a disposal followed by reinvestment on a platform. Keep the transaction confirmation and the related wallet or exchange records together so that the transfer you report can be traced from acquisition through disposal.
Record dates consistently
Use the acquisition date and transfer date shown by reliable exchange or blockchain records, and retain the time-zone convention used to convert timestamps into dates. If an exchange statement and wallet record differ, preserve both and document how you reconciled them.
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Consideration received
Consideration is what you received for the transfer, supported by the transaction confirmation, exchange statement, counterparty record or other contemporaneous evidence. Keep the valuation method and currency conversion evidence with the transaction file. Do not substitute an arbitrary end-of-year price for the value at the transfer date.
Allowable acquisition cost
Section 115BBH expressly permits the cost of acquisition, if any, and disallows other expenditure and allowances. The cost should be traceable to the Ethereum units actually transferred. If you bought units in multiple lots, keep a defensible lot-allocation method and apply it consistently; where the applicable rules do not answer your allocation question, seek professional advice instead of guessing.
For a transaction involving several acquisition lots, retain enough detail to explain how the amount reported as cost relates to the units disposed of. Do not assume that an annual average, a preferred lot, or a platform’s display automatically answers the tax question. The AY 2026–27 Schedule VDA asks for a cost and consideration for each transaction, but its listed fields do not set out a complete lot-matching or rupee-conversion method for every fact pattern.
Gifted Ethereum
The AY 2026–27 Schedule VDA gives a specific instruction for gifted assets: enter the amount on which tax was paid under section 56(2)(x), if any. If no amount was taxed under that provision, use the previous owner’s cost. Preserve the gift documentation, the previous owner’s acquisition evidence and any section 56(2)(x) computation.
Step 3: Exclude costs that section 115BBH does not allow
The statutory language is explicit: “no deduction in respect of any expenditure (other than cost of acquisition, if any) or allowance or set off of any loss shall be allowed.” Accordingly, do not reduce VDA-transfer income by the following items unless authoritative guidance for your exact facts says otherwise:
| Item | Treatment in the section 115BBH calculation |
|---|---|
| Documented acquisition cost of the transferred Ethereum | Expressly permitted, if any |
| Exchange trading fee | Not deductible under the stated rule |
| Blockchain gas fee | Not deductible under the stated rule |
| Wallet, software or advisory expense | Not deductible under the stated rule |
| Interest, salary or other business overhead | Not deductible under the stated rule |
| Loss from another VDA transfer | Cannot be set off under section 115BBH |
Keep invoices and fee records anyway. They may help reconcile the cash movement and establish the transaction history, even though they do not reduce the VDA-transfer income under this provision.
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Step 4: Calculate each transfer and handle losses correctly
For a gain-making transaction, use:
VDA-transfer income = consideration received − allowable acquisition cost
Calculate transactions separately before preparing Schedule VDA. If a transaction produces a loss, the form instructs you to enter nil for transfer income in that row. That reporting instruction does not turn the loss into a deduction elsewhere.
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Assume you acquired Ethereum for ₹200,000 and later transferred it for ₹320,000. Ignoring any valuation issue and assuming the records support both figures:
- Consideration: ₹320,000
- Allowable acquisition cost: ₹200,000
- VDA-transfer income: ₹120,000
- Tax at 30% before surcharge and cess: ₹36,000
The ₹36,000 is only the special-rate component. Your tax on other income is computed separately and then combined with the applicable additions to arrive at the overall liability.
Illustrative loss
Assume a separate lot cost ₹150,000 and was transferred for ₹110,000. The economic result is a ₹40,000 loss, but you cannot use that amount to reduce the ₹120,000 gain above, your salary, interest or any other income under section 115BBH. The Schedule VDA row records nil transfer income for the loss transaction, subject to the form’s instructions.
Because the provision also bars carrying a VDA-transfer loss into later assessment years, retaining the loss as a future tax asset is not permitted under this rule.
The examples show why transaction-level computation matters: a profitable transfer is not simply netted against every loss in the same year to produce one crypto figure. Keep the gain and loss records separately, enter the required nil transfer income for the loss row, and do not use that loss to reduce the taxable income from another VDA transaction or a different source.
Step 5: Apply the 30% rate and calculate the rest of the return
After determining the permitted VDA-transfer income, apply 30% to it. Then remove that amount from total income and calculate the tax on the remaining income under the provisions applicable to your taxpayer category and chosen regime, where relevant. Add the two components and account for any surcharge and health and education cess that your complete income and status trigger.
The 30% figure is a statutory special rate identified by the Income Tax Department’s section 115BBH text, effective from 1 April 2023 following the Finance Act 2022 insertion. It is not a withholding percentage and it is not a universal effective rate on the complete return.
For a simple illustration, if the section 115BBH computation produces ₹120,000 of VDA-transfer income, the special-rate calculation is ₹36,000 before applicable surcharge and cess. That figure does not determine the tax on the rest of the return. Salary, interest and other income remain subject to their applicable rules, and the final amount payable depends on the taxpayer’s full circumstances, including applicable additions and any tax credits or withholding reflected in the return.
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Choosing the reporting head: business or capital gain
Schedule VDA contains separate fields for the income head “business or profession” and “capital gain.” The correct head depends on your actual activity and facts. Frequency, organisation, intention and the way you conduct the activity may be relevant, but the Income Tax Department’s form instructions do not provide a complete classification test.
Questions to document
- Were the transactions occasional investments or a systematic trading activity?
- Did you maintain a trading operation, strategy, infrastructure or business records?
- How frequently did you acquire and dispose of Ethereum?
- What was your stated intention when acquiring the units?
Do not choose “business” merely to claim trading costs: section 115BBH’s deduction restriction still applies to VDA-transfer income. If your facts could support either head, document the reasoning and obtain advice before filing.
How to complete Schedule VDA for AY 2026–27
The AY 2026–27 return form requires transaction-level information. Prepare a worksheet that mirrors these fields:
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| Schedule VDA field | What to prepare |
|---|---|
| Date of acquisition | Exchange confirmation, wallet history and lot records |
| Date of transfer | Disposal or settlement timestamp converted to the filing record’s date |
| Income head | Business/profession or capital gain, based on your facts |
| Cost of acquisition | Documented cost of the transferred Ethereum; special gift instruction where applicable |
| Consideration received | Value supported by transfer and currency-conversion records |
| Income from transfer | Consideration less allowable acquisition cost; enter nil for a loss as instructed |
The form’s gift instruction uses the section 56(2)(x) amount where tax was paid; otherwise it points to the previous owner’s cost. Keep the supporting papers even when a field is nil.
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Linking the amount to other schedules
The AY 2026–27 ITR-2 form lists section 115BBH income in Schedule SI at 30% and links the VDA amount from the capital-gains schedule to that line. The applicable return form may differ where the activity is reported under business or profession. Use the form that matches your taxpayer category and income heads; do not force a capital-gains schedule when your facts require a different return.
Before filing, reconcile the total of the individual Schedule VDA entries with the relevant amount carried into the return’s other schedules. Check that each transfer has both dates, a supportable acquisition cost and consideration, and the income head you intend to report. If a row shows nil because it is a loss, retain the underlying calculation and records; nil in that field is not permission to apply the loss elsewhere.
Records to retain
A complete transaction file is more reliable than a year-end spreadsheet reconstructed from memory. Retain:
- Exchange statements showing deposits, purchases, sales, fees and withdrawals.
- Wallet addresses and blockchain transaction IDs for acquisitions and disposals.
- Purchase confirmations and evidence of the amount paid.
- Disposal confirmations showing what was received.
- Records supporting the rupee value and conversion rate used on each date.
- Gift deeds, previous-owner cost records and section 56(2)(x) computations for gifted Ethereum.
- A reconciliation between exchange totals, wallet movements and bank statements.
- A written explanation for transactions classified as business/profession or capital gain.
Schedule VDA’s transaction-level design makes these records important: each row should be explainable from source documents, not just from an unexplained annual total.
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For a practical audit trail, give each row a transaction ID and note where its evidence is stored. Keep exchange exports in their original form as well as any cleaned worksheet, and preserve the link between a wallet transaction ID and the related exchange entry where possible. If a figure was converted into rupees, retain the underlying currency amount, conversion rate, timestamp and calculation rather than only the final rupee total.
AY 2026–27 filing date: check your category
The Income Tax Department portal lists AY 2026–27 forms as available. It also reports that, for the persons covered by the specified statutory-table category, the return due date was extended from 31 October 2026 to 21 November 2026. That extension is not a universal deadline. Confirm the live portal notice and the filing category that applies to you before relying on either date.
Do not treat this extension as applying to every individual or every return. The portal notice describes a specified category, and the filing obligation or deadline for another category may differ. Confirm which return applies to your facts and check the Income Tax Department portal for the current notice when you prepare to file.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Events that need separate analysis
A transfer calculation does not answer every question involving Ethereum. Staking rewards, mining proceeds, airdrops, gifts received, cross-border activity and non-resident status can involve separate recognition and reporting rules. Do not automatically apply the acquisition-cost-minus-consideration formula to the moment a reward, token or gift is received.
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Common mistakes and corrections
Applying 30% to all income
Correction: isolate VDA-transfer income and calculate other income under its own rules.
Deducting exchange or gas fees
Correction: subtract only the permitted acquisition cost unless authoritative guidance for your facts provides otherwise.
Netting a crypto loss against salary or another coin’s gain
Correction: enter nil transfer income for the loss row as instructed and do not set it off or carry it forward under section 115BBH.
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Reporting only bank withdrawals
Correction: review disposals and exchanges across every platform and wallet; a taxable transfer need not end with a bank withdrawal.
Using an unsupported exchange rate
Correction: preserve the valuation source, timestamp and conversion calculation for every consideration figure.
Assuming the 21 November date applies to everyone
Correction: verify the specified AY 2026–27 category and current portal notice before filing.
A practical worksheet
For each transaction, create one row with these columns:
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- Transaction ID and platform or wallet.
- Ethereum quantity and asset description.
- Acquisition date and acquisition cost.
- Transfer date and consideration received.
- Currency, conversion rate and evidence location.
- Potential income head: business/profession or capital gain.
- Consideration minus allowable acquisition cost.
- Nil entry if the result is a loss.
- Schedule VDA row number and return-schedule reference.
Then reconcile the worksheet to exchange statements, wallet records and bank movements. The worksheet is an organisational tool; it does not override the statutory prohibition on expense deductions, loss set-off or carry-forward.
Frequently Asked Questions
Is Ethereum taxed at 30% in India?
Section 115BBH applies a 30% special rate to income from transfer of a virtual digital asset, including Ethereum. It does not mean that all of your salary, interest or other income is taxed at 30%. Calculate tax on the remaining income separately, and account for any applicable surcharge and cess.
Can I deduct Ethereum trading fees or gas charges from the gain?
Section 115BBH expressly permits the cost of acquisition, if any, and disallows other expenditure and allowances in computing VDA-transfer income. Trading fees and gas charges therefore should not be deducted under that provision without authoritative guidance for your exact facts. Keep the records for reconciliation.
Can I use an Ethereum loss to reduce salary or another crypto gain?
No. Section 115BBH bars setting off a VDA-transfer loss against income computed under any provision and also bars carrying that loss into later assessment years. The AY 2026–27 Schedule VDA instructs you to enter nil transfer income for a loss transaction; it does not make the loss deductible elsewhere.
What should I report for gifted Ethereum?
The AY 2026–27 Schedule VDA instructs you to use the amount on which tax was paid under section 56(2)(x), if any, as the acquisition cost. If no amount was taxed under that provision, the form points to the previous owner’s cost. Keep the gift documents and supporting cost or tax records.
Does an Ethereum-to-token swap count as a taxable transfer?
The result depends on whether the particular event legally counts as a transfer. Do not assume a swap is outside the rules just because you received no rupees, but do not treat every wallet movement as a disposal either. Keep the transaction records and obtain advice if a swap, migration or settlement is uncertain.
Is 21 November 2026 the filing deadline for every AY 2026–27 return?
No. The Income Tax Department portal reports an extension from 31 October 2026 to 21 November 2026 for persons in a specified statutory-table category. It is not a universal deadline; confirm the category and current portal notice that apply to your return.
The Bottom Line
For each taxable Ethereum transfer, document the consideration and acquisition cost, subtract only the acquisition cost permitted under section 115BBH, and apply the 30% special rate to the resulting VDA-transfer income. Do not deduct fees or set off or carry forward VDA losses under this provision. Report transaction-level details in the correct AY 2026–27 return, keep supporting records, and verify both your filing category and any uncertain transaction treatment.
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