Short answer: no. In India, a loss on one crypto asset cannot reduce the tax on a gain from another, cannot be set off against salary, shares or any other income, and cannot be carried forward to next year. It simply lapses. That rule surprises a lot of first-time filers in March, so here is what the law says and what it costs in rupees.
What the law actually says
The rule was written into section 115BBH of the Income-tax Act, 1961 by the Finance Act, 2022, effective from 1 April 2023. It does three things to income from a “virtual digital asset” (VDA), which covers crypto and NFTs:
- Taxes the gain at a flat 30% (plus 4% cess, so 31.2%), regardless of your slab.
- Allows no deduction except cost of acquisition: no exchange fees, no gas, no “set off of any loss” while computing that income.
- Bars any set-off of a VDA loss against income under any other provision, and says the loss “shall not be allowed to be carried forward”.
The Income-tax Act, 2025, which replaced the old Act from 1 April 2026, carries the same three rules across with the same wording on set-off and carry-forward, per commentary on the new Act. Tax practitioners read it as applying to each transfer separately, so a loss on Ether does not net against a gain on Bitcoin even inside the same year.
A worked example: one good trade, one bad one
Say that in tax year 2026-27 you sell some Bitcoin for a ₹1,00,000 profit and some Ether at a ₹60,000 loss. Your real-world profit is ₹40,000.
| Crypto (VDA rules) | Listed shares, short-term (for comparison) | |
|---|---|---|
| Gain on asset A | ₹1,00,000 | ₹1,00,000 |
| Loss on asset B | –₹60,000 | –₹60,000 |
| Taxable amount | ₹1,00,000 (loss ignored) | ₹40,000 (loss set off) |
| Rate incl. 4% cess | 31.2% | 20.8% (20% STCG + cess) |
| Tax | ₹31,200 | ₹8,320 |
| Tax as % of your real ₹40,000 profit | 78% | 20.8% |
How we calculated this: 30% or 20% rate, plus 4% health and education cess, no surcharge, IST 28 Oct 2026. Short-term gains on listed shares sold through an exchange are taxed at 20% from 23 July 2024, and their losses can be set off and carried forward.
The same ₹40,000 of real profit costs ₹22,880 more in tax because it came from crypto. And if the Ether loss were bigger than the Bitcoin gain, you would still pay ₹31,200 on the Bitcoin while the loss disappeared on 31 March.
You can run your own numbers in our crypto loss set-off calculator, which shows the gap between what you made and what you’re taxed on.
Three myths worth dropping
”I’ll sell my losers before 31 March to cut my tax.” Tax-loss harvesting works for shares, not crypto. Selling a losing coin saves nothing on your crypto gains. It does trigger 1% TDS on the sale value, which you then claim back when you file.
”I’ll carry the loss into next year when the market recovers.” No. The law says the loss can’t be carried forward, so last year’s loss can’t offset next year’s gains.
”My total income is under the rebate limit, so I owe nothing.” Not for the crypto part. An ITAT bench ruling held that a taxpayer whose crypto gain was taxed at the special 30% rate could not claim the section 87A rebate against it.
What it means for Indian investors
- Report every loss anyway. Even though it saves no tax, each sale belongs in Schedule VDA with its date, cost and sale value, and the TDS on it must match your Form 26AS/AIS. Our crypto ITR checklist walks through it.
- Think in gains per trade, not net portfolio. Every profitable sale is taxed at 31.2% on its own. Frequent switching between coins can mean paying tax on wins while losses vanish.
- Check the bill before you sell. Our crypto tax calculator for India and TDS calculator show the tax and TDS on a sale in rupees. For the wider rules, see our India crypto regulation and tax explainer.
BtcMedia verdict: India’s crypto tax is harsh mainly because of the loss rule, more than the 30% rate. If you trade several coins, you’re taxed on your best trades and get no relief for your worst ones. Plan around that before you trade, because filing season is too late to fix it.
FAQ
Can I set off a Bitcoin loss against an Ethereum gain in India? No. Each crypto transfer is computed on its own, and no VDA loss can be set off against any other income, including another coin’s gain.
Can crypto losses be carried forward to the next year? No. Both the 1961 Act (section 115BBH) and the Income-tax Act, 2025 say VDA losses cannot be carried forward.
Do I still need to report crypto losses in my ITR? Yes. Report every transfer, gain or loss, in Schedule VDA, and claim credit for the 1% TDS deducted on your sales.
This article explains the law as written and is not tax or financial advice. Check your own situation with a chartered accountant.