P2P Crypto Tax Guide India 2026

Every USDT-INR P2P trade in India is a taxable event. The rules are simple in principle and unforgiving in practice. This guide walks through the 30% flat rate (Section 115BBH), the 1% TDS (Section 194S), Schedule VDA in your ITR, GST, and the most common filing mistakes — with worked examples specific to P2P trading on FastXP2P and other exchanges.

2026 snapshot

• 30% flat tax on every rupee of profit from VDA transfers (Section 115BBH).
• 1% TDS on the sale leg above ₹10,000 / ₹50,000 thresholds (Section 194S).
• No set-off of losses against other heads.
• No loss carry-forward across assessment years.
• Schedule VDA mandatory in ITR-2 / ITR-3 / ITR-4.
• Cost of acquisition only — no deduction for expenses other than acquisition cost.

Section 115BBH — the 30% flat rate

Inserted by Finance Act 2022, Section 115BBH taxes income from "transfer of any virtual digital asset" at a flat 30% (+ surcharge + cess). Crucially:

• The flat rate applies regardless of your total income slab.
• Only the cost of acquisition is deductible — no infrastructure, broker, or internet expenses.
• "Transfer" includes sale of USDT for INR, swap to another VDA, or use as consideration for goods.

Section 194S — 1% TDS

Effective 1 July 2022, every transfer of VDA against consideration in India attracts 1% TDS:

• Threshold: ₹50,000/year for "specified persons" (individuals/HUF without business turnover above limits) and ₹10,000/year otherwise — per buyer-seller pair.
• The buyer is the deductor in a P2P trade where INR moves to the seller.
• For P2P trades on Indian exchanges (FastXP2P, WazirX, CoinDCX), the exchange handles TDS deduction and remittance.
• For peer-to-peer trades between two individuals off-exchange — the buyer is personally liable for deduction.

Worked examples

Example 1 — Simple profit

Bought 100 USDT at ₹92 = ₹9,200. Sold at ₹95 = ₹9,500.

• Profit: ₹300
• Tax (30%): ₹90
• TDS (1% on ₹9,500 sale leg, if above threshold): ₹95 — adjustable against final liability.

Example 2 — Multiple lots

Five buys at ₹91, ₹92, ₹93, ₹94, ₹95 (100 USDT each). One sell at ₹96 of 500 USDT = ₹48,000. Total cost = ₹46,500. Profit = ₹1,500. Tax = ₹450. TDS = ₹480.

Example 3 — Loss

Bought 1,000 USDT at ₹95 = ₹95,000. Sold at ₹93 = ₹93,000. Loss ₹2,000. Cannot be set off against salary or other VDA gains; cannot be carried forward.

Schedule VDA in ITR

Every VDA disposal must be reported transaction-by-transaction:

• Date of acquisition
• Date of transfer
• Cost of acquisition (INR)
• Consideration on transfer (INR)
• Income (consideration − cost)

Download a transaction CSV from your FastXP2P account → Reports → "Tax Statement (Schedule VDA format)" — pre-formatted for direct ITR import.

No set-off, no carry-forward

VDA losses cannot reduce: salary, business income, capital gains on other assets, or even VDA losses across years. Each FY stands alone.

GST applicability

For retail users buying/selling USDT for personal investment — no GST on the asset value. GST may apply if you operate as an exchange or dealer with turnover above thresholds. Exchanges charge 18% GST on their service fee (irrelevant on zero-fee platforms like FastXP2P).

Penalties for non-compliance

• Under-reported income: 50% penalty (Section 270A).
• Mis-reporting: 200% penalty.
• TDS non-deduction: interest at 1% per month + penalty equal to deductible TDS.
• Late ITR: ₹5,000 if filed after due date (₹1,000 for income under ₹5L).

Filing checklist (FY 2025-26)

1. Download annual P2P trade ledger from each exchange.
2. Reconcile to Form 26AS for TDS already deducted.
3. Compute profit/loss per transaction (FIFO cost method recommended).
4. Fill Schedule VDA in ITR-2 / ITR-3.
5. Pay any balance tax via Challan 280.
6. Keep ledgers and bank statements for 7 years (retention rule).

FAQ