Here's the entire formula for crypto tax in India, before we do anything else: tax = 30% of (sale consideration − cost of acquisition), plus 4% health & education cess on that tax — an effective 31.2% on every gain, under Section 115BBH. The 1% TDS deducted on your sells under Section 194S is not an extra tax; it's a prepayment you subtract from your final bill (or get refunded). No indexation, no slab benefit, no long-term rate, and — critically — no setting off losses against gains.
That's the theory. But almost nobody gets confused by the formula — they get confused applying it to their trades. So instead of another explainer, here are twelve fully worked examples with clean INR numbers. Find the ones that look like your year, follow the math, and you'll know exactly how your number is built. (And if you'd rather not do it by hand at all, the CryptoITR calculator does all twelve of these patterns automatically.)
Example 1: A Simple Bitcoin Profit
Setup: You buy 0.05 BTC for ₹2,00,000 in September. In February you sell all of it for ₹3,00,000 on an Indian exchange.
- Sale consideration: ₹3,00,000
- Cost of acquisition: ₹2,00,000
- Gain: ₹3,00,000 − ₹2,00,000 = ₹1,00,000
- Tax @ 30%: ₹30,000
- Cess @ 4% of ₹30,000: ₹1,200
- Total liability: ₹31,200
- TDS already deducted (1% of ₹3,00,000): ₹3,000
- Net payable at filing: ₹31,200 − ₹3,000 = ₹28,200
Gotcha: the 1% TDS is calculated on the full sale value (₹3,00,000), not on your gain. Many traders assume TDS covers their tax — here it covers less than a tenth of it.
Example 2: A Gain on One Coin, a Loss on Another (No Set-Off)
Setup: Your ETH trades produce a gain of ₹80,000. Your SOL trades produce a loss of ₹50,000. Intuitively you made ₹30,000 — but that's not how 115BBH works.
- ETH computation: gain ₹80,000 → tax ₹24,000 + cess ₹960 = ₹24,960
- SOL computation: loss ₹50,000 → taxable gain ₹0, tax ₹0 — and the loss cannot reduce the ETH gain, and cannot be carried forward to next year
- Total liability: ₹24,960 — on ₹80,000 of gains, even though your net portfolio profit was only ₹30,000
Gotcha: each VDA computation stands alone. The ₹50,000 loss simply evaporates for tax purposes. This is the single most expensive misunderstanding in Indian crypto tax — our full explainer on why crypto losses can't be offset covers the fine print.
Example 3: Multiple Buys, One Sell (FIFO)
Setup: You accumulate BTC in three tranches: 0.01 BTC at ₹40,000 (April), 0.01 BTC at ₹50,000 (July), 0.01 BTC at ₹60,000 (October). In January you sell 0.02 BTC for ₹1,30,000.
Under FIFO (First In, First Out), the oldest coins are sold first:
- Cost of the 0.02 BTC sold: ₹40,000 (April lot) + ₹50,000 (July lot) = ₹90,000
- Gain: ₹1,30,000 − ₹90,000 = ₹40,000
- Tax: ₹12,000 + cess ₹480 = ₹12,480
- Remaining holding: 0.01 BTC with a cost basis of ₹60,000 (the October lot), carried forward for your next sell
Gotcha: if you'd (incorrectly) used your average cost (₹50,000 per 0.01), you'd compute a ₹30,000 gain and underpay. FIFO is the accepted standard — the edge cases are in our FIFO guide.
Example 4: Crypto-to-Crypto Swap (Yes, It's Taxable)
Setup: You bought 1 ETH for ₹1,50,000. Months later, when that ETH is worth ₹2,50,000, you swap it for USDT. No rupees ever touched your bank account.
- A swap is a transfer of the ETH — a taxable disposal at fair market value
- Deemed sale consideration: ₹2,50,000
- Gain: ₹2,50,000 − ₹1,50,000 = ₹1,00,000
- Tax: ₹30,000 + cess ₹1,200 = ₹31,200
- Your USDT now has a cost basis of ₹2,50,000 for its own future disposal
Gotcha: "I never cashed out to INR" is not a defence. The tax is due in rupees even though your profit is sitting in USDT — plan liquidity for it.
Example 5: P2P Sale (You Handle the TDS)
Setup: You sell USDT worth ₹1,00,000 to another individual via P2P. Your cost for that USDT was ₹90,000.
- Gain: ₹1,00,000 − ₹90,000 = ₹10,000
- Tax: ₹3,000 + cess ₹120 = ₹3,120
- TDS under Section 194S: on P2P there's no exchange in the middle to deduct it — the buyer is generally required to deduct 1% (₹1,000) and deposit it against your PAN
Gotcha: in practice, P2P TDS compliance is poor — if the buyer never deposits it, you get no credit, and the department still sees the bank transfer. Keep records of every P2P leg. Full detail in our 1% TDS guide.
Example 6: Staking Rewards, Then Selling Them (Taxed Twice, Correctly)
Setup: You stake a token and receive 100 reward tokens during the year, worth ₹50 each on the days you received them. Later you sell all 100 at ₹80.
Two separate tax events:
- Event 1 — receipt: ₹5,000 (100 × ₹50 FMV) is income, taxed at your normal slab rate. If you're in the 20% bracket, that's roughly ₹1,000 + cess.
- Event 2 — disposal: sale consideration ₹8,000 (100 × ₹80), cost of acquisition ₹5,000 (the FMV you already paid income tax on)
- Gain: ₹3,000 → tax ₹900 + cess ₹36 = ₹936 under 115BBH
Gotcha: people either forget Event 1 entirely, or they use a cost basis of ₹0 at Event 2 and pay 31.2% on the full ₹8,000. Both are wrong. The FMV at receipt does double duty: it's your income and your cost basis.
Example 7: An Airdrop
Setup: A project airdrops you tokens worth ₹20,000 on the day they land in your wallet. Six months later you sell them for ₹30,000.
- On receipt: ₹20,000 taxed as income at your slab rate (e.g. ~₹4,160 in the 20% bracket, incl. cess)
- On sale: gain = ₹30,000 − ₹20,000 = ₹10,000 → tax ₹3,000 + cess ₹120 = ₹3,120
Gotcha: if the token had instead crashed and you sold at ₹8,000, you'd have a ₹12,000 loss on disposal — which, per Example 2, sets off against nothing. You'd still have paid slab tax on the full ₹20,000 at receipt. Airdrops are not free money at tax time.
Example 8: An NFT Sale
Setup: You minted/bought an NFT for ₹25,000 and sold it for ₹60,000.
- NFTs are notified as Virtual Digital Assets — same 115BBH treatment as coins
- Gain: ₹60,000 − ₹25,000 = ₹35,000
- Tax: ₹10,500 + cess ₹420 = ₹10,920
Gotcha: marketplace fees and gas you paid to mint or list are not deductible — 115BBH allows only the cost of acquisition, nothing else. Your real profit after fees might be ₹30,000, but you're taxed on ₹35,000.
Example 9: Income Below the Taxable Limit — 30% Still Applies
Setup: A student earns ₹2,00,000 from a part-time job (below the basic exemption limit) and makes ₹1,00,000 in crypto gains. Surely no tax, right?
- Wrong. 115BBH gains are taxed at a flat 30% regardless of your slab
- Tax on crypto: ₹30,000 + cess ₹1,200 = ₹31,200
- The unused basic exemption on the salary side cannot be adjusted against VDA gains, and the Section 87A rebate is generally not available against 115BBH income per the prevailing interpretation and the ITR utility's treatment
Gotcha: this is the harshest edge of the regime — a person with total income well under the normal taxable threshold still pays 31.2% on crypto gains. If this is your exact situation, confirm the current-year position with a CA before filing, but budget for the full amount.
Example 10: TDS Exceeds Your Tax — Refund Case
Setup: A high-frequency trader churns ₹40,00,000 of total sell volume across the year but ends up with only ₹50,000 of net taxable gains (lots of small wins; the losses, as always, don't count against the wins that remain).
- Tax due: 30% of ₹50,000 = ₹15,000 + cess ₹600 = ₹15,600
- TDS deducted: 1% of ₹40,00,000 sell volume = ₹40,000
- Refund due: ₹40,000 − ₹15,600 = ₹24,400
Gotcha: you only get this refund if you actually file and claim the TDS — verify every deduction shows in your Form 26AS/AIS first. High-volume traders routinely leave five-figure refunds unclaimed because "crypto tax" sounded like something to avoid filing.
Example 11: Crypto Gifted by a Non-Relative
Setup: A friend (not a relative under the Income Tax Act) gifts you crypto with a fair market value of ₹80,000.
- Gifts of VDAs from non-relatives are taxable in your hands if the aggregate value exceeds ₹50,000 in a year — and once over the line, the entire ₹80,000 is taxed as income from other sources at your slab rate (e.g. ~₹16,640 in the 20% bracket, incl. cess)
- That ₹80,000 FMV then becomes your cost of acquisition. Sell later at ₹1,20,000 → gain ₹40,000 → 115BBH tax ₹12,000 + cess ₹480 = ₹12,480
- Gifts from specified relatives, or on marriage or inheritance, are exempt on receipt — but the later sale is still taxable
Gotcha: ₹50,000 is a cliff, not a deduction. A ₹49,000 gift is fully exempt; a ₹51,000 gift is fully taxable.
Example 12: Futures & Derivatives — A Different Regime (Briefly)
Setup: You trade BTC perpetuals on a derivatives exchange and close the year with ₹1,50,000 of net trading profit, never holding spot coins.
We're deliberately not showing a 30% computation here, because crypto F&O doesn't fit the 115BBH mould neatly: you trade contracts, not the underlying VDA, and the prevailing practice is to report derivatives P&L as business income — taxed at slab rates, with expenses and (unlike 115BBH) loss set-off potentially available. The area is still evolving and judgment-heavy, so read our dedicated futures & perpetuals tax guide and involve a CA if your volumes are significant.
Gotcha: don't blend derivatives P&L into your spot 115BBH computation in either direction — keep the two cleanly separated in your records and your return.
The Pattern Behind All Twelve
Every spot example above is the same four steps, repeated per disposal:
- Find the sale consideration (or FMV, for swaps).
- Find the cost of acquisition — FIFO for multi-lot holdings, FMV-at-receipt for staking/airdrops/gifts already taxed as income.
- Tax any gain at 30% + 4% cess. Ignore losses — they set off nothing.
- Subtract TDS actually deducted; pay the balance or claim the refund.
Simple in a blog post with round numbers. Genuinely painful across 400 real trades on three exchanges — which is exactly the job the CryptoITR calculator automates: upload your exchange files, it runs FIFO, applies 115BBH, totals your 194S TDS, and produces an ITR-ready report.
These examples are illustrative and simplified for clarity. Crypto tax outcomes depend on your full facts, and interpretations (especially around rebates, gifts and derivatives) continue to evolve. This is not tax advice — please consult your CA before filing.
Calculate Your Own Numbers — Free
You've seen the math twelve times over. Now run it on your actual trades: upload your exchange report to the CryptoITR calculator — calculating is free, and an ITR-ready report starts at ₹199 per financial year.