A common assumption among students, homemakers and retirees who trade crypto goes like this: “My income is under the tax-free limit, so I owe nothing.” For crypto, that’s wrong. India’s flat crypto tax ignores the basic exemption and the new-regime rebate, so a gain is taxed from the first rupee.
The short answer
Profit from selling, swapping or spending crypto is taxed at 30% plus 4% cess, or 31.2%, no matter how little else you earn. Under the Income-tax Act, 2025, in force since 1 April 2026, this is item 4 of the special-rate table in section 194 (it was section 115BBH in the 1961 Act).
The old section shows why the exemption doesn’t help. It computes tax in two parts: 30% on the crypto gain, plus the tax you’d owe “had the total income… been reduced by” that gain. Your ₹4 lakh tax-free slab only works on the second part, your other income. Equity capital gains get a special clause letting residents use unused exemption against them. Crypto gets no such clause.
The rebate doesn’t reach crypto either
The new regime’s headline promise is no tax up to ₹12 lakh of income, delivered through a rebate of up to ₹60,000. But section 156 of the 2025 Act gives that rebate only where income is chargeable at the normal slab rates under section 202(1), and caps it at the tax worked out at those rates. Crypto gains are taxed at the special 30% rate, so the rebate can wipe out tax on your salary or interest but not on your crypto.
This has already been tested. In Ankit Kabra v ITO, the Income Tax Appellate Tribunal’s Surat bench looked at a taxpayer whose total income was ₹4,80,800, including ₹2,02,993 of crypto gains, for assessment year 2024-25. He claimed the ₹25,000 rebate available under the old section 87A. The tribunal said no: crypto income sits under the special-rate section, not the new-regime slab section, so the rebate doesn’t apply. By our maths, the tax on his crypto gain alone was about ₹63,300 (30% plus 4% cess on ₹2,02,993).
Our worked examples
| Who | Other income | Crypto gain | Tax on the crypto gain |
|---|---|---|---|
| Student, no income | ₹0 | ₹1,00,000 | ₹31,200 |
| Homemaker with FD interest | ₹2,00,000 | ₹1,00,000 | ₹31,200 |
| Salaried, new regime | ₹10,00,000 | ₹1,00,000 | ₹31,200 |
| Same person, ₹1 lakh extra as interest instead | ₹11,00,000 | ₹0 | ₹0 (total stays under ₹12 lakh, covered by rebate) |
The ₹31,200 doesn’t move with your income. The last row is the comparison that stings: the same ₹1 lakh earned as interest would be absorbed by the rebate, while the crypto version owes the full 31.2%. Surcharge only starts at much higher incomes, so it doesn’t change these rows.
Two other rules make it harsher. Only the cost of buying the coin can be deducted, not exchange fees. And a loss on one coin can’t cut the gain on another, as we showed in our Ethereum-versus-Bitcoin loss example.
What it means for Indian investors
- File a return even if you earn nothing else. If you made a crypto gain, tax is due, and a return is how you report it in Schedule VDA.
- Your 1% TDS is a credit, not a final tax. If you sold ₹3 lakh of crypto on an Indian exchange, about ₹3,000 was deducted. It reduces the ₹31,200, and if you had a loss it can come back as a refund. See our TDS refund explainer.
- Check your own number. Our crypto tax calculator for India works out the 31.2% on your gain, and the advance tax calculator shows whether you need to pay part of it before March.
BtcMedia verdict: for crypto, there’s no “below the limit”. The first rupee of gain is taxed at 31.2%, so a student’s small profit and a salaried trader’s profit cost exactly the same.
FAQ
I’m a student with no income. Do I pay tax on a crypto profit? Yes. The gain is taxed at 30% plus 4% cess. The ₹4 lakh basic exemption doesn’t apply to it.
Does the ₹12 lakh no-tax rule cover crypto? No. The rebate under section 156 of the 2025 Act applies only to slab-rate income. Crypto gains are taxed at a special rate outside it.
What if I made a loss on crypto? You owe no crypto tax, but you can’t set the loss off or carry it forward. File a return anyway to reclaim any 1% TDS deducted.
This is general information, not financial or tax advice. Rules can change, so check with a chartered accountant for your own case.
How we calculated this: 30% plus 4% cess on each gain; ITAT figures from the Surat bench order linked above; rebate rules per sections 156 and 202(1) of the Income-tax Act, 2025, checked 30 October 2026, 4:55 PM IST.