Crypto taxes for NRIs have changed, and the 2026 compliance framework brings strict rules you need to understand. Your crypto gains face a flat 30% tax rate, whatever the holding period, and transactions exceeding specific thresholds trigger 1% TDS. Undisclosed crypto holdings found during searches can be taxed at a steep 60% rate under new amendments. This piece walks you through the current crypto tax rate structure and reporting crypto taxes correctly. You'll learn which transactions are taxable, how to report them, and practical steps to stay compliant with Indian tax authorities. We cover compliance strategies that help you file crypto taxes without penalties.
Key Takeaway
Understanding crypto taxes as an NRI can seem daunting, but keeping a few principles in mind ensures compliance and avoids penalties:
- Flat 30% Tax on Gains: All crypto profits are taxed at a flat rate of 30%, with an additional 4% health and education cess.
- Mandatory 1% TDS: Transactions above thresholds attract 1% TDS, deducted by exchanges or buyers in peer-to-peer trades.
- No Loss Offsets: Losses from one crypto transaction cannot reduce gains from another; each transaction is taxed independently.
- Accurate Reporting is Critical: Schedule VDA in ITR-2 or ITR-3 must reflect all crypto holdings and transactions, supported by detailed records.
NRI Status and Crypto Tax Basics
Your residential status determines which crypto transactions you need to report and pay crypto taxes on in India. Section 115BBH governs crypto taxation but doesn't distinguish between residents and non-residents. NRIs face the same flat 30% tax rate as Indian residents on their crypto gains.
Where your crypto transactions occur becomes the critical factor. Those gains remain non-taxable in India if you transfer crypto through exchanges located outside India, use a wallet outside India, and receive proceeds in bank accounts outside India. Your tax liability hinges on the source and receipt of income.
Determining Your Tax Residency
You qualify as a resident for tax purposes if you stay in India for 182 days or more in a financial year. Spending 60 days or more in a financial year and 365 days or more in the preceding four years also makes you a resident. Your global crypto income becomes taxable in India once you meet either criterion, not just Indian-sourced transactions.
NRIs only pay crypto tax on income earned or received in India. Your transactions are sourced in India and fall under Indian tax jurisdiction when you use Indian exchanges like WazirX, CoinDCX, or ZebPay. Routing crypto transactions through NRO accounts or Indian savings accounts triggers tax liability similarly, even when you reside abroad.
Tax Treatment Without Special Exemptions
NRIs cannot claim tax exemption under section 115F, unlike some provisions available to residents. This section provides relief on capital gains from specific shares and bonds, but crypto is excluded from the eligible asset list. The 30% flat rate applies whatever your global income falling in a lower tax slab.
You cannot offset crypto losses against other cryptocurrencies or any other income sources. This prohibition applies to both residents and NRIs. Each crypto transaction stands alone for tax purposes, with no provision to reduce your overall tax burden through loss harvesting.
TDS and Transaction Thresholds
Section 194S mandates 1% TDS on crypto sales above specified thresholds. TDS applies when total transactions exceed ₹10,000 in a financial year for salaried individuals. Business owners and traders face TDS when transactions cross ₹50,000 annually. Indian exchanges withhold this amount and remit it to the income tax department directly.
You need to file your ITR when you want to claim refunds on deducted TDS, even if your income falls below taxable limits. Proper reporting is required to maintain a clean tax history, whatever the transaction size.
Mandatory Reporting Requirements
NRIs must disclose crypto holdings and capital gains when they file their ITR. Schedule VDA in ITR-2 or ITR-3 serves as the designated section for reporting Virtual Digital Assets. You need to provide the date of acquisition, date of transfer, cost of acquisition, and consideration received for each transaction.
Accurate reporting depends on your residential status, where trades occur, and whether income is earned or received in India. Transactions on foreign exchanges using foreign wallets and bank accounts escape Indian taxation generally, but you must maintain detailed records to prove your position.
Double Taxation Considerations
Double Taxation Avoidance Agreements between India and your country of residence may affect your crypto tax liability. These treaties prevent taxation of the same income by two countries. But taxability still depends on your residential status and specific DTAA provisions between the countries involved.
2026 Crypto Tax Rates and Regulations
Budget 2026 maintains the existing crypto tax framework introduced in 2022. Rates remain unchanged while stricter compliance measures take effect. The regulatory environment focuses on transaction tracking and penalty enforcement rather than rate adjustments.
Flat 30% tax rate on crypto gains
Section 115BBH imposes a flat 30% tax on income from transferring Virtual Digital Assets. This rate applies uniformly with no regard for your income bracket or how long you held the asset. A 4% health and education cess gets added on top. The effective rate reaches 31.2%.
The tax applies when you sell crypto for Indian Rupees. It also kicks in when you trade one cryptocurrency for another, spend crypto on goods or services, or gift crypto assets. Only your acquisition cost qualifies as a deductible expense. Platform fees, gas fees for blockchain transactions, internet costs, and mining infrastructure expenses cannot reduce your taxable gains.
This structure is different from how other assets are taxed. Equity investments allow you to claim transaction costs and benefit from lower long-term capital gains rates. Crypto taxation offers no such flexibility. You cannot offset losses from one crypto transaction against gains from another. Each transaction stands isolated. This eliminates any tax planning through strategic loss realization.
The absence of loss set-off provisions creates situations where your overall portfolio declines in value, yet you still owe taxes on individual profitable trades. Tracking each transaction separately becomes mandatory for accurate tax calculation.
TDS requirements for crypto transactions
Section 194S mandates 1% TDS on the sale value of crypto transfers. This deduction happens on the total transaction value, not just your profit. Indian exchanges automatically withhold this amount and deposit it with the Central Government.
Threshold limits determine when TDS applies. If you have business turnover up to ₹1 crore or professional receipts up to ₹50 lakh, TDS kicks in when total crypto transactions exceed ₹50,000 in a financial year. The threshold drops to ₹10,000 annually for specified persons including companies and traders above these limits.
When you trade one cryptocurrency for another, both buyer and seller face 1% TDS. The buyer becomes responsible for deducting and depositing TDS for peer-to-peer transactions or trades on overseas exchanges. This shifts compliance burden onto individual traders rather than platforms.
You must file Form 26QE to deposit tax deducted on Virtual Digital Assets. The form requires submission within 30 days from the end of the month when deduction occurred. The deducted TDS appears in your Form 26AS and Annual Information Statement. This creates an audit trail for tax authorities.
Failure to deduct or deposit TDS triggers interest charges and penalties. Non-compliance carried potential imprisonment of three to seven years previously. Budget 2026 reduced this to a maximum of two years. Courts can now convert violations into monetary penalties instead.
New amendments in Budget 2026
Budget 2026 introduced penalty provisions targeting reporting entities under Section 509 of the Income Tax Act. These amendments strengthen compliance around crypto-asset transaction reporting rather than changing tax rates.
Entities required to furnish statements on crypto transactions face a penalty of ₹200 per day for non-filing. The penalty continues for as long as the default persists. A separate flat penalty of ₹50,000 applies when incorrect information gets filed or errors remain uncorrected after notification. These provisions take effect from April 1, 2026.
The amendments modify Section 446 to include these penalty structures. The memorandum explaining Finance Bill provisions states these measures want to strengthen compliance and discourage inaccurate or incomplete reporting. Reporting requirements now carry financial consequences. This pushes exchanges and platforms toward better record maintenance.
The unchanged tax rates disappointed industry participants who lobbied for relief from the 1% TDS that dampens trading liquidity. Market observers note that while compliance obligations expand, the core friction points of high taxation remain unaddressed.
Types of Crypto Transactions and Their Tax Treatment
Different crypto activities trigger distinct tax treatments, though most end up facing the same 30% rate. You need to understand which tax applies when for accurate reporting and compliance.
Capital gains from buying and selling crypto
Your profit calculation subtracts acquisition cost from sale proceeds when you sell crypto for Indian Rupees. This gain faces the flat 30% rate plus 4% cess. No other expenses qualify for deduction. Transaction fees, platform charges, and storage costs cannot reduce your taxable amount.
Your cost basis represents what you paid to acquire the crypto. Say you purchased Bitcoin for ₹15,000 and sold it for ₹25,000. Your taxable gain equals ₹10,000. The 30% tax liability amounts to ₹3,000, with an additional 1% TDS of ₹250 deducted at sale. You pay the remaining ₹2,750 when filing your ITR.
This structure applies the same way whether you held the asset for one day or five years. The absence of long-term capital gains benefits distinguishes crypto from equity investments, where holding beyond twelve months provides tax advantages.
Mining and staking income taxation
Mining rewards face dual taxation. The fair market value on receipt date gets taxed at your applicable income slab rate when you receive mined crypto. This income falls under "Income from Other Sources" without expense deductions for hobbyist miners. Professional miners operating as businesses can deduct electricity, hardware depreciation, and maintenance costs before calculating taxable income.
Your cost basis for mined crypto equals the FMV at receipt. The 30% rate applies to gains above this basis when you later sell. To name just one example, mining 0.1 BTC when FMV equals ₹40,00,000 creates a ₹4,00,000 cost basis. Selling later at ₹50,00,000 generates ₹1,00,000 taxable gain, resulting in ₹30,000 tax plus ₹1,200 cess. On top of that, 1% TDS of ₹5,000 gets deducted on the full sale value.
Staking follows the same treatment. Rewards received get taxed at slab rates based on FMV at receipt. Selling those rewards triggers the 30% capital gains tax. Think over staking 50 Solana tokens and earning 5 SOL as rewards when FMV equals ₹6,000 per token. The ₹30,000 reward value gets added to your income and taxed per your slab. Selling those 5 SOL later at ₹7,200 each creates ₹6,000 capital gain, taxed at 30% for ₹1,800 plus ₹72 cess.
Airdrops and hard forks
Airdrops constitute taxable income at receipt. The FMV of tokens when they hit your wallet gets taxed at your income slab rate. This applies whether you actively sought the airdrop or received it passively. Rule 11UA determines valuation based on exchange or DEX pricing at receipt time.
Hard forks creating new cryptocurrencies trigger taxation only when you receive and control the new tokens. Merely holding crypto through a hard fork without receiving new coins creates no tax liability. Their FMV becomes taxable income at your slab rate once you receive forked tokens. Later disposal generates capital gains taxed at 30% on the difference between sale price and original FMV.
This dual taxation means you pay once on receipt and again on disposal, like mining and staking treatment.
Crypto-to-crypto trades
Trading one cryptocurrency for another constitutes a taxable disposal event. You calculate gain by determining the FMV of crypto you disposed of on trade date, then subtracting its cost basis. The resulting profit faces 30% tax plus cess.
Both parties in a crypto-to-crypto trade face 1% TDS obligations. The buyer must deduct TDS from payment to the seller. Individual traders bear responsibility for deducting and depositing this TDS for peer-to-peer transactions without exchange intermediation. This administrative burden adds complexity beyond simple fiat-to-crypto purchases, which only trigger TDS at the exchange level.
How to Report Crypto Taxes as an NRI
Filing your crypto taxes requires selecting the correct ITR form and completing Schedule VDA with precision. The Income Tax Department mandates specific forms for NRIs based on your income sources, and mistakes in form selection lead to rejection.
ITR form selection for crypto income
NRIs cannot use ITR-1 or ITR-4 when reporting cryptocurrency income. Your form choice depends on whether you treat crypto as an investment or business activity.
ITR-2 applies when you have salary, house property income, capital gains from crypto, and other income sources without any business or professional income. Most NRIs holding crypto as investments use this form. ITR-2 captures this transaction appropriately if you purchased Bitcoin, held it, and sold for profit.
ITR-3 becomes mandatory when you classify crypto as business income or have other income from business or profession. Systematic trading, market-making activities, or running crypto-related services require ITR-3 filing. The difference matters because business income allows expense deductions that capital gains treatment prohibits.
Both forms have Schedule VDA, so your form selection doesn't affect disclosure requirements. Rather, it determines how your overall income profile gets categorized and taxed. Choose ITR-2 for straightforward investment activities and ITR-3 when crypto trading constitutes your business.
Schedule VDA disclosure requirements
Schedule VDA appears in both ITR-2 and ITR-3 as a dedicated section for Virtual Digital Asset reporting. You must fill this schedule whenever you have taxable VDA transactions during the financial year, whatever your residency status.
Detailed transaction information is required in the schedule. You enter the type of VDA (crypto or others), acquisition date, date of transfer, sale consideration, and acquisition cost for each transaction. You can report transactions individually or as consolidated blocks, depending on utility options available in the filing software.
Date of acquisition, date of transfer, cost of acquisition, and consideration received must be disclosed. The utility calculates income from VDA based on your entries automatically and applies the 30% tax rate separately from your slab-based income.
Penalties and penal interest for underreporting get triggered by failure to report VDA income. Tax authorities cross-reference your Schedule VDA entries with TDS data from exchanges, making accurate disclosure non-negotiable. Any TDS deducted on your transactions appears in Form 26AS and must match your reported figures.
Keep exchange CSVs, blockchain transaction proofs, and INR valuations to support your entries. Documentation may be requested by the tax department during assessment proceedings, and missing records complicate verification. Each transfer needs supporting evidence showing acquisition cost and sale proceeds.
Filing deadlines and extensions
Your ITR filing deadline as an NRI typically falls at the end of July following the financial year's close. The last date to file stands at September 15, 2025 for FY 2024-25 (AY 2025-26).
India's financial year runs from April 1st to March 31st. Deadlines can be extended by notification, and belated, revised, or updated return options remain available within prescribed windows. Always confirm currently notified dates before filing, as extensions get announced periodically.
Filing becomes necessary when you want to claim refunds on deducted TDS, even if your income falls below taxable limits. Only Excel utilities for ITR-2 and ITR-3 have been released for AY 2025-26 currently. You can download utilities and prepare your return offline meanwhile, though the online filing facility launches later.
Tax Planning Strategies for NRIs
Planning opportunities for crypto taxes remain limited, yet specific strategies can help you reduce your overall liability within legal boundaries. The rigid 30% rate structure offers no exemptions, but thoughtful transaction management makes a difference in what you ended up paying.
Transaction timing to minimize tax liability
Transaction timing affects tax outcomes. Strategic scheduling involves monitoring price movements and executing sales during periods when you can manage total tax exposure across your portfolio. To name just one example, Bitcoin drops from ₹40,00,000 to ₹35,00,000. Selling at the lower price reduces your taxable gain compared to selling at peak.
Price volatility requires constant attention. The market declines and you can take action to reduce gains on transfers. This approach doesn't eliminate the 30% rate, but it lowers the base amount being taxed. Phased disposal becomes especially useful when an asset yields gains at first but faces downward pressure later in the year.
You can align disposals with your residential status and create additional planning scope. NRIs transitioning between resident and non-resident status should schedule major transactions during periods of favorable tax treatment. Complete sales through foreign exchanges while maintaining non-resident status. Those transactions stay outside Indian tax jurisdiction, provided proceeds flow to foreign bank accounts.
Cost basis calculation methods
Your cost basis has the purchase price plus acquisition fees. Gas fees, exchange commissions and transfer charges paid to acquire crypto form part of this basis. Higher cost basis translates to lower taxable gains. You purchased Ethereum for ₹2,50,000 and paid ₹5,000 in fees. Your total cost basis equals ₹2,55,000. Selling at ₹3,00,000 produces ₹45,000 taxable gain instead of ₹50,000 had you ignored fees.
India uses the FIFO method for capital assets, making it reasonable to apply the same approach to crypto. Under FIFO, coins you acquired first get deemed sold first. This matters when you've made multiple purchases at different prices. You bought 1 BTC at ₹30,00,000 and another at ₹35,00,000, then sold 1 BTC at ₹40,00,000. Your cost basis becomes ₹30,00,000 under FIFO and generates ₹10,00,000 taxable gain.
Specific identification remains permissible on the condition that you maintain detailed transaction records for each coin. This method tracks individual units and identifies which specific coins you're selling. It potentially offers more favorable outcomes in certain scenarios.
Tax loss harvesting opportunities
Tax loss harvesting starts with disposing assets in a phased manner when they've declined from their peak value. You monitor volatility constantly and execute trades at opportune moments to minimize the gain base. You cannot offset crypto losses against gains, but strategic timing of when you realize those losses versus gains within the same year affects your cash flow and overall tax position.
Selling assets at lower valuations reduces the taxable income generated. This becomes relevant when you hold multiple cryptocurrencies. Losses cannot offset gains under the law, but realizing smaller gains through strategic timing beats triggering large taxable events.
Foreign tax credits
Foreign Tax Credit prevents double taxation when you pay crypto taxes in another country and India. The credit equals the lower of the tax paid abroad or the Indian tax liability on that same income. To name just one example, you paid $1,000 tax on crypto gains in the US (₹83,000 at current rates) but Indian tax on the same income amounts to ₹75,000. Your credit maxes out at ₹75,000.
Form 67 submission becomes mandatory to claim this credit. You must file it during the relevant assessment year and include documentation proving foreign tax payment. DTAA provisions between India and your residence country determine eligible taxes. The credit applies only to taxes covered under treaty definitions, not penalties or interest.
Converting foreign tax into INR requires using the Telegraphic Transfer Buying Rate on the last day of the month preceding payment due date. This conversion determines your claimable credit amount in Schedule FSI of your ITR.
Common Pitfalls and Compliance Tips
Accurate records protect you from penalties and simplify tax compliance. Your documentation strategy determines whether you can validate positions during assessments or face disputes with tax authorities.
Documentation and record-keeping requirements
Export transaction histories from all wallets and exchanges you've used. Convert each transaction into INR using official exchange rates applicable on transaction dates. You need detailed records showing timestamps, amounts and wallet addresses for every buy, sell, trade and transfer.
Keep these records for at least six years. Financial Intelligence Unit regulations require exchanges to retain customer and transaction records for at least five years, or longer if investigations continue. Settle 1% TDS in Form 26AS with your exchange statements to ensure accuracy.
Avoiding penalties for non-compliance
Late filing penalties reach ₹10,000 or more, depending on delay duration. Tax authorities have identified undisclosed VDAs worth ₹888.82 crore and issued over 44,000 communications to taxpayers flagged for non-disclosure. AI-driven systems now compare TDS data deposited by exchanges against income you declare in returns.
Underreporting or misreporting income triggers severe penalties and prosecution under Indian tax laws. File returns before due dates to avoid these consequences.
Crypto tax professionals
Consultants draft professional responses to Income Tax Department notices and represent you during proceedings. They create documentation that withstands ITD scrutiny, especially valuable when you have hundreds or thousands of transactions. Professional guidance becomes critical as crypto transactions now face focused ITD audits.
Conclusion
Crypto taxation for NRIs remains complex when you consider everything, but understanding the framework keeps you compliant. The 30% flat rate applies uniformly to your gains. 1% TDS tracks every transaction above specified thresholds. You cannot offset losses, and accurate record-keeping becomes critical for each trade.
Schedule VDA reporting becomes mandatory when filing ITR-2 or ITR-3, whatever the transaction size. Your residential status and where transactions occur determine tax liability, especially with foreign exchanges versus Indian platforms.
Maintain detailed documentation and track TDS deductions in Form 26AS. Consult professionals when the situation demands it. Proper planning today prevents penalties tomorrow.
Frequently Asked Questions
What tax rate do NRIs pay on cryptocurrency gains in India?
NRIs pay a flat 30% tax on all cryptocurrency gains, regardless of how long they held the asset. An additional 4% health and education cess applies, bringing the effective tax rate to 31.2%. This rate applies uniformly without any deductions for transaction fees or other expenses except the original acquisition cost.
When do NRIs need to pay TDS on crypto transactions?
A 1% TDS applies when crypto transactions exceed ₹50,000 annually for individuals with business turnover up to ₹1 crore, or ₹10,000 annually for companies and specified persons. Indian exchanges automatically deduct this TDS on the total transaction value, not just the profit, and deposit it with the tax authorities.
Which ITR form should NRIs use to report cryptocurrency income?
NRIs must use ITR-2 if they treat crypto as an investment alongside salary and other income sources. ITR-3 is required when crypto activities constitute business or professional income. Both forms include Schedule VDA, which is the mandatory section for reporting all Virtual Digital Asset transactions.
Can NRIs offset cryptocurrency losses against gains?
No, NRIs cannot offset losses from one cryptocurrency transaction against gains from another. Each crypto transaction is treated separately for tax purposes, with no provision for loss harvesting or reducing overall tax liability through strategic loss realization.
About the Author
By Prakash
CEO & Founder of InvestMates
Prakash is the CEO & Founder of InvestMates, a digital wealth management platform built for the global Indian community. With leadership experience at Microsoft, HCL, and Accenture across multiple countries, he witnessed firsthand challenges of managing cross-border wealth. Drawing from his expertise in engineering, product management, and business leadership, Prakash founded InvestMates to democratize financial planning and make professional wealth management accessible, affordable, and transparent for every global Indian.
