India's Crypto Tax Framework: No Loss Offset Against Gains

India's Virtual Digital Assets (VDA) tax framework has a strict rule that prohibits offsetting crypto losses against gains, making it one of the harshest in the world for active traders. According to Section 115BBH(2)(b) of the Income Tax Act 2025, crypto losses cannot be set off against any gain or income under Indian tax law.

Not only can losses not be used to offset gains within the same financial year and asset class, but they also cannot reduce salary income, business income, rental income, or capital gains from equity or property. Furthermore, VDA losses cannot be carried forward to future years, making every gain a standalone taxable event.

Each profitable transfer is taxed at 30% plus 4% cess on its full gain, with no netting or grouping of gains and losses. This means that even if an investor has a large loss on one trade, it will not provide any relief against the gain on another trade.

The only deduction available to reduce crypto tax in India is the cost of acquisition, the original INR purchase price. Other expenses such as exchange fees, gas fees, brokerage charges, and advisory costs are not deductible.