India taxes profit from any virtual digital asset (VDA) at a flat 30% under Section 115BBH, plus surcharge and cess — with no deductions beyond cost of acquisition and no way to set off losses. On top of that, a separate 1% TDS is deducted at the point of transfer under Section 194S. The 30% is income tax on your gain; the 1% TDS is a withholding on the transaction value itself — two different levies that both bite, even when you only break even.
Flat 30% tax on VDA gains under Section 115BBH (+ surcharge + 4% cess) — the same rate whether you earn ₹10,000 or ₹10 lakh.
Only the cost of acquisition is deductible. No expenses, no indexation, no carrying losses forward, no setting one coin's loss against another's gain.
1% TDS under Section 194S is deducted on transfer when value crosses ₹50,000/year (specified persons) or ₹10,000/year (others) — it is a credit against your final tax, not an extra cost.
USDC and USDT are VDAs, so converting stablecoins to INR is a taxable transfer — the off-ramp event triggers both the 30% on any gain and the 1% TDS.
A compliant, purpose-code off-ramp gives you the documented paper trail that makes filing Schedule VDA straightforward; StableCorp off-ramps to INR at 1%.
This is general information, not legal or tax advice. India's VDA rules are time-sensitive — as of June 2026, the figures below reflect the law in force. Confirm current guidance with the Income Tax Department or a qualified Chartered Accountant before you file.
How much tax do you pay on crypto gains in India?
You pay a flat 30% on the gain from transferring any VDA, plus applicable surcharge and a 4% health-and-education cess — regardless of your income slab or how long you held the asset.
Section 115BBH was inserted by the Finance Act, 2022 and took effect from 1 April 2023. It applies one rate to every VDA gain: there is no short-term-versus-long-term distinction, no slab benefit, and no basic exemption that shelters small gains. A salaried founder in the 5% bracket and a crypto whale in the 30% bracket pay the identical 30% on their VDA profit.
Crucially, the only thing you can subtract is your cost of acquisition.
That means trading fees, gas, advisory charges, and interest on money you borrowed to buy are all non-deductible. The statute is explicit: no deduction in respect of any expenditure (other than cost of acquisition) or any allowance or set-off of any loss is permitted in computing VDA income. If you bought USDT for ₹1,00,000 and sold for ₹1,30,000, your taxable gain is ₹30,000 and your tax is ₹9,000 plus cess — the ₹500 exchange fee changes nothing.
Can you set off crypto losses against gains in India?
No. A loss on one VDA cannot be set off against a gain on another, against any other income, or carried forward to future years.
This is the part that surprises most founders. If you make ₹50,000 on Bitcoin and lose ₹50,000 on Ethereum in the same year, you are net flat — but you still owe 30% on the ₹50,000 Bitcoin gain. The Ethereum loss is simply ignored for tax purposes.
Compare that to equities or property, where losses offset gains and unused losses carry forward for years. VDAs get none of that relief, which makes high-frequency trading punishingly tax-inefficient in India.
| Feature | VDA (Section 115BBH) | Listed equity (for contrast) |
|---|---|---|
| Tax rate | Flat 30% + surcharge + cess | Slab/12.5%-20% depending on holding |
| Deductions allowed | Cost of acquisition only | Cost + related transfer expenses |
| Loss set-off | Not allowed against any income | Allowed within capital-gains rules |
| Loss carry-forward | Not allowed | Up to 8 years |
| TDS on transfer | 1% under Section 194S | No equivalent 1% transfer TDS |
What is the 1% TDS on crypto under Section 194S?
Section 194S requires 1% tax to be deducted at source on the consideration paid for transferring a VDA, once your transactions cross a yearly threshold.
The thresholds are ₹50,000 in a financial year for "specified persons" (broadly, individuals and HUFs without a tax-audit-level business turnover) and ₹10,000 for everyone else. Once you cross the line, the 1% is withheld on the transaction value — not on your profit. On a ₹1,00,000 sale, ₹1,000 is deducted even if you made zero gain.
The important thing: 194S TDS is not an extra tax.
It is a prepayment. The 1% deducted shows up against your PAN, and you claim it as a credit when you file your return — reducing your final 30% liability or generating a refund if you over-withheld. The friction is cash-flow and paperwork, not double taxation. You'll reconcile it in the Schedule VDA section of ITR-2 or ITR-3, which now requires transaction-wise disclosure.
Are USDC and USDT taxed under the 30% VDA regime?
Yes — stablecoins are VDAs, so converting USDC or USDT to rupees is a taxable transfer that can trigger both the 30% on any gain and the 1% TDS.
The definition in Section 2(47A) sweeps in any information, code, number, or token generated through cryptographic means — explicitly excluding Indian and foreign currency. A dollar-pegged stablecoin like USDC, issued by Circle and backed 1:1, is not foreign currency in the legal sense; it is a token. So when an Indian founder receives USDC for services and off-ramps it to INR, the law treats that conversion as a VDA transfer.
Here's the non-obvious part most guides miss.
Because USDC holds a steady ₹-to-$ value, your taxable "gain" on an off-ramp is usually just the rupee appreciation between the day you received the stablecoin and the day you converted it — often small or nil — but the 1% Section 194S TDS still applies to the full transfer value, and you must report the event in Schedule VDA regardless. This is why the documentation around your off-ramp matters as much as the tax math: you need a clean record of receipt value, conversion value, and the TDS deducted to compute the gain correctly and claim the credit.
StableCorp off-ramps USDC to INR at 1% against supported RBI purpose codes — P0802, P1004, P1005, P1006, P1007, P1009 (others on request) — so every conversion lands with a documented purpose and a clean paper trail for your Schedule VDA filing. See pricing.
How do founders stay compliant when off-ramping stablecoins to INR?
You stay compliant by converting through a documented, purpose-coded rail and reporting the transfer — not by doing a peer-to-peer swap that leaves no record of what the money was for.
The regulatory grey area in India isn't the tax — the 30% and 1% are clear statutes. The grey area is the off-ramp mechanics: a direct wallet-to-bank cash-out or an informal P2P trade gives you no proof of the inflow's purpose, which is exactly what creates exposure under India's foreign-exchange rules and makes your VDA reporting impossible to substantiate.
A compliant off-ramp solves both problems at once. It records the inflow against an RBI purpose code, gives you a statement showing the conversion value and any TDS, and produces the audit trail you need to file Schedule VDA accurately. VDA service providers operating in India register with FIU-IND under the PMLA, so a compliant partner sits inside the AML framework rather than around it.
This is where pricing and compliance line up in your favour.
StableCorp off-ramps directly to INR at 1%, or at 0.5% for clients incorporated with StableCorp (1.5% on-ramp), against the market's ~2.9% headline plus roughly 2% hidden FX markup that adds up to about 5% effective. The full breakdown is on the pricing page — and the 1% you pay is documented, not buried in a spread.
Worked example: tax on a $5,000 USDC payment off-ramped to INR
Say you invoice a US client $5,000, receive it as USDC, and off-ramp it to rupees two weeks later — here's roughly how the VDA rules apply.
You receive 5,000 USDC. At ₹83/$, that's ₹4,15,000 of value on the receipt date — your cost basis for the stablecoin.
Two weeks later you off-ramp. If the rupee is at ₹83.50/$, the conversion value is ₹4,17,500, so your VDA "gain" is ₹2,500.
30% tax under 115BBH applies to that ₹2,500 gain = ₹750 plus cess. The currency movement, not a price rally, is what's taxed here.
1% TDS under 194S is deducted on the ₹4,17,500 transfer value = ₹4,175, withheld against your PAN — claimed back as a credit at filing.
Separately, your $5,000 of services income is taxed as business/professional income under your normal slab — the VDA rules cover only the gain on the token itself, not the underlying earnings.
The last point trips people up, so it's worth bolding.
Receiving USDC as payment for work is ordinary income taxed at your slab; the 30% VDA tax applies only to the gain on the token between receipt and conversion. Founders who route earnings through a US entity often pay the services income there and off-ramp only the portion they bring home — see our guide to paying contractors in USDC and the foreign-owned US LLC explainer for how that structure works.
The bottom line on India's crypto tax
India's VDA regime is simple to state and harsh to apply: 30% flat on gains, 1% TDS on transfers, no loss relief, and full Schedule VDA disclosure.
For founders earning in stablecoins, the tax math on a steady-value coin like USDC is usually modest — but the reporting and the off-ramp documentation are where compliance is won or lost. Convert through a purpose-coded, FIU-registered rail, keep your receipt-and-conversion records, and claim your 194S credit. StableCorp handles the compliant off-ramp at 1% with the paper trail built in — the rail, not just the rate, is the product.
Sources
Income Tax Department (India) — Section 115BBH (Tax on income from virtual digital assets) — https://www.incometaxindia.gov.in/w/section-115bbh
Income Tax Department (India) — Section 194S (TDS on transfer of VDAs) — https://www.incometaxindia.gov.in/w/section-194s-4
Income Tax Department (India) — TDS on payment for the transfer of VDAs — https://www.incometaxindia.gov.in/w/tds-on-payment-for-the-transfer-of-virtual-digital-assets-vdas-
Income Tax Department (India) — Schedule VDA — https://www.incometaxindia.gov.in/w/schedule_vda
Circle — USDC — https://www.circle.com/usdc