Where India's Crypto Tax Stands in 2026 for NRIs: The 30% Flat Tax Survives Another Budget, and the Reporting Net Gets Tighter

On 1 February 2026, the Finance Minister presented the Union Budget for 2026-27, and the domestic crypto industry got the answer it had spent months lobbying against: nothing changed. The flat 30% tax on virtual digital assets held. The 1% TDS held. The proposal to cut TDS from 1% to 0.01%, pitched by exchanges as a liquidity fix, went nowhere. What the Budget did add was teeth on the reporting side, a Rs 200-per-day penalty for platforms that fail to file their crypto transaction statements, with the machinery switching on from 1 April 2026. For an NRI holding crypto with any Indian footprint, this is the moment to understand exactly where you stand, because the rate is frozen but the visibility is about to jump.

The 30-second answer: As of Budget 2026 (presented 1 February 2026), India taxes virtual digital assets at a flat 30% plus 4% cess under what was Section 115BBH and is now Section 194 of the Income-tax Act, 2025, with no loss set-off, no holding-period benefit, and only cost of acquisition deductible. A 1% TDS under Section 194S (now Section 393) applies to transfers through Indian exchanges or Indian buyers above Rs 10,000 a year. Gains go in Schedule VDA of ITR-2 or ITR-3. For an NRI, the rate is settled but the source question is not: trade on an Indian exchange and the income is taxable in India; trade purely offshore as a non-resident and it generally is not. From 1 April 2026, Indian platforms must report transactions under Section 509, and CARF data-sharing with your home country is targeted for around 2027.

This is a news-analysis piece, dated to early March 2026, so treat it as a snapshot of a moving target. What follows is where the law actually sits after this Budget, the part that is genuinely unsettled for non-residents (the source-of-income question), how the answer flips depending on whether you trade on an Indian or a foreign exchange, and why the reporting changes matter more to an NRI than the tax rate ever will. If you want the evergreen mechanics of how an NRI is taxed on crypto, read the dedicated VDA guide; this piece is about what the 2025-26 changes did to that picture.

The 30% did not move, and now it is in a new Act

The headline rate has not changed since it was introduced for the financial year starting 1 April 2022, and Budget 2026 kept it exactly where it was. A gain on the transfer of a virtual digital asset is taxed at 30% flat, plus the standard 4% health and education cess, taking the effective rate to 31.2% before any surcharge. There is no concept of short-term versus long-term here, no 12.5% concession the way listed equity gets, and no benefit of the basic exemption limit eating into the gain. Every rupee of gain above zero is taxed at the same rate whether you held the token for three days or three years.

The one structural thing that did change, and that most NRI readers have not registered, is the container. The old Income-tax Act, 1961 has been replaced by the Income-tax Act, 2025, which takes effect from 1 April 2026. The crypto provisions were carried forward almost verbatim but renumbered. The 30% charging section that everyone calls 115BBH is now Section 194 of the new Act. The 1% TDS that everyone calls 194S is now Section 393. The definitions of a virtual digital asset survive intact. For practical purposes the substance is unchanged, but if your CA or your filing software still cites 115BBH for a transaction dated after 1 April 2026, that is a sign the references have not been updated, not that the rule is different.

The two features that make this regime punishing are the ones Budget 2026 again declined to soften. First, no set-off of losses: a loss on one VDA cannot be offset against a gain on another VDA, let alone against salary, rent or capital gains, and it cannot be carried forward. If you made Rs 5,00,000 on one token and lost Rs 4,00,000 on another in the same year, you are taxed on the full Rs 5,00,000 gain at 30%, a tax of Rs 1,50,000, while the Rs 4,00,000 loss simply disappears. Second, no deduction except cost of acquisition: exchange fees, gas fees, transfer charges, and for miners the entire cost of mining infrastructure, are not deductible. The government confirmed in Parliament that mining infrastructure is capital expenditure and falls outside the cost of acquisition. So the 30% is levied on a gain figure that is gross of almost every real cost you incurred to earn it.

The question that actually decides your tax is not the rate, it is the source

Here is the part that separates a thoughtful NRI from someone who reads "30% flat tax" and panics. Section 194 does not distinguish between residents and non-residents. It does not need to, because residence is handled upstream by the basic charging provisions. A non-resident is taxable in India only on income that accrues or arises in India, or is received in India, or is deemed to accrue or arise in India. So before the 30% rate can bite an NRI, the gain has to clear that threshold. For a resident, worldwide crypto income is in scope and the source question never arises. For a non-resident, the source question is the whole game.

And this is where the law is genuinely unsettled, and I will not pretend otherwise. A virtual digital asset has no obvious physical location. A Bitcoin is not "in" India the way a Mumbai flat or a share in an Indian company is. There is no statutory situs rule for crypto, no notification fixing where a token is deemed to be located, and no decided case that an NRI can lean on. The Income-tax Department has not issued guidance pinning down when an NRI's crypto gain is Indian-sourced. So the analysis falls back on first principles: where did the transaction happen, where was the income received, and where is the counterparty.

The working consensus among practitioners, and the position I would file on, is that the exchange you use is the deciding fact. Trade through an Indian exchange and the income is sourced and received in India, full stop, the 30% and the 1% TDS apply, and you have an Indian filing obligation. Trade through a foreign exchange, with a foreign-based wallet, settling proceeds to a foreign bank account, while you are a non-resident for that year, and the gain generally does not accrue, arise, or get received in India. India has no hook. That is not a loophole, it is the ordinary operation of source rules for someone who is not a resident. But understand that it rests on interpretation, not on a black-letter rule, and the absence of a situs definition means a future clarification could narrow it.

On an Indian exchange, the tax is mechanical and the TDS is the friction

Take Arjun, a UAE-resident NRI who never gave up his CoinDCX account from his India days. In the year to 31 March 2026 he buys Ethereum for Rs 8,00,000 and sells it on the same Indian exchange for Rs 14,00,000, a gain of Rs 6,00,000.

Because the trade runs through an Indian exchange, the income is Indian-sourced and the regime applies in full. The 30% tax on the Rs 6,00,000 gain is Rs 1,80,000, plus 4% cess of Rs 7,200, a total of Rs 1,87,200. Separately, the exchange deducted 1% TDS under Section 194S on the gross sale value of Rs 14,00,000 at the point of sale, that is Rs 14,000, and remitted it against his PAN. When Arjun files ITR-2 and reports the gain in Schedule VDA, he sets the Rs 14,000 already deducted against the Rs 1,87,200 liability and pays the balance of Rs 1,73,200. The 1% is advance tax, not an extra layer.

Now the counterfactual that shows why the no-set-off rule is the real cost. Suppose in the same year Arjun also lost Rs 5,00,000 on a different token, again on the Indian exchange. Common sense says his net position is a Rs 1,00,000 gain. The law disagrees. The Rs 6,00,000 winning gain is taxed at 30% regardless, Rs 1,80,000 plus cess, and the Rs 5,00,000 loss is ignored entirely, not even carried to next year. He pays roughly Rs 1,87,200 of tax on an economic profit of Rs 1,00,000, an effective rate of about 187% on what he actually made. Had this been listed equity, the loss would have sheltered the gain and he would have paid almost nothing. That asymmetry, not the 30% headline, is why crypto is the most tax-hostile asset an NRI can hold through India.

The TDS also creates a quieter trap that NRIs hit more than residents. Because 1% is levied on turnover, not gain, an active trader churning the same capital racks up TDS that dwarfs the eventual tax on the modest net gain. If Arjun had traded Rs 1.4 crore of volume in the year for a net gain of Rs 6,00,000, the 1% TDS would be Rs 1,40,000, close to the entire Rs 1,87,200 liability, locking up his cash until he files and reclaims it. For a non-resident with no other large Indian income to absorb the credit, that often means waiting months for a refund. A non-resident cannot escape 194S on an Indian exchange, but you can plan around it by trading less frequently and in larger blocks rather than scalping.

On a foreign exchange, the picture usually inverts

Take the same UAE-resident NRI, but this time he is disciplined about jurisdiction. He trades only on a foreign exchange such as Binance or Kraken, funds it from his UAE bank account, holds his coins in a wallet linked to that foreign platform, and withdraws proceeds back to the UAE. He is a non-resident for the year, having spent fewer than 182 days in India and not triggering the 60-day rule.

On these facts, the Rs 6,00,000 gain does not accrue, arise, or get received in India. There is no Indian exchange, no Indian buyer, no Indian bank account in the chain. India's 30% has nothing to attach to. There is no Section 194S deduction either, because 194S only operates where the transfer runs through an Indian deductor. And because the UAE levies no personal income tax on capital gains, this NRI legitimately pays zero tax on the gain, in India or at home. That is not aggressive planning, it is what the source rules produce for a genuine non-resident transacting wholly offshore.

Contrast that with a US-resident NRI on identical offshore facts. India still has no claim, for the same source reasons. But the United States taxes its residents and citizens on worldwide income, so the gain is fully taxable in the US under American crypto rules, as a short or long-term capital gain depending on the holding period. There is no Indian tax to credit because India is not taxing it, so the DTAA never comes into play. The lesson is that the offshore route removes the Indian layer for everyone, but only Gulf residents end up at zero, because the West taxes the gain at home regardless of where the exchange sits. This is why the answer differs so sharply by country of residence, and why a blanket "NRIs pay 30%" statement is simply wrong for the offshore case.

The decision an NRI faces, then, is rarely about the rate and almost always about jurisdiction. If you are building a crypto position from abroad and you are a settled non-resident, there is little reason to route it through an Indian exchange and volunteer into the 30%, the 1% TDS drag, and the Indian filing burden. The Indian exchange makes sense only if you have INR sitting in India you want to deploy, or you are close to returning and your residency is about to flip.

DTAA gives you almost nothing here, and the "other income" article is the reason

NRIs are used to treaties doing heavy lifting, the way the India-UAE treaty can zero out tax on listed shares. On crypto, the treaty is mostly a spectator, and it is worth understanding why. A double tax treaty only allocates taxing rights once a country has a domestic charge. If India has no source claim on your offshore crypto gain, there is no Indian tax for the treaty to relieve. If India does have a claim, because you traded on an Indian exchange, then the relevant article matters, and here the treaties are not kind to crypto.

Crypto does not fit cleanly into the capital gains article of most treaties, which is built around shares, immovable property and business assets, none of which a token clearly is. That pushes the gain toward the "other income" article, which in the India-US, India-UK and India-Canada treaties typically allows the source state, India, to tax income arising in India. So a US-resident NRI who trades on an Indian exchange faces Indian 30%, then claims a foreign tax credit in the US for the Indian tax paid, via the US foreign tax credit mechanism, to avoid being taxed twice. The treaty does not reduce the Indian rate; it only prevents double taxation. For a UAE resident on an Indian exchange, the treaty offers no rate cut either, because the gain is Indian-sourced and the UAE has no offsetting tax to allocate. The classification of crypto under DTAAs remains genuinely unsettled internationally, so on any large Indian-sourced crypto gain, get the treaty position confirmed for your specific country rather than assuming the share treatment carries over. The general mechanics are in DTAA relief for NRIs.

Schedule VDA, and why filing matters even when you owe nothing

Since the financial year 2022-23, crypto gains have had a dedicated home in the return, Schedule VDA, which appears in ITR-2 (for those without business income) and ITR-3 (for those treating crypto trading as a business). It asks for each transaction: the date of acquisition, the date of transfer, the cost, the consideration, and the resulting income. The 1% TDS shows up in your Form 26AS and your Annual Information Statement, both keyed to your PAN, so the Department already sees your Indian-exchange activity whether or not you file.

For an NRI this creates a filing obligation that is easy to overlook. If 194S TDS was deducted on your Indian-exchange trades, that TDS is sitting against your PAN, and the only way to either reclaim an excess or settle a shortfall is to file an Indian return reporting the gain in Schedule VDA. Skipping the return does not make the income invisible; it makes you a non-filer with a visible transaction trail, which is the worst of both worlds. And the new Income-tax Act, 2025 sharpened the downside considerably. From the 2025 Budget, undisclosed VDA holdings found in a tax search can be assessed under the block assessment regime, taxed at 60% plus penalty, with the search reaching back across a block period of the year of search plus several preceding years. Crypto was explicitly brought within the definition of undisclosed income for this purpose. The message is blunt: report your Indian crypto, because the cost of being found not to have reported it is double the rate plus penalty.

The reporting net is the real 2026 story

Step back from the rate, which did not move, and the genuine change this year is visibility. Two reporting layers are switching on, and an NRI should plan for both.

The domestic layer is Section 509 of the Income-tax Act, 2025, the successor to the Section 285BAA proposed in Budget 2025. From 1 April 2026, prescribed reporting entities, Indian crypto exchanges, custodians, wallet providers, and notified service providers handling Indian users, must furnish statements of crypto-asset transactions to the CBDT. Budget 2026 added the enforcement edge that was missing: a penalty of Rs 200 per day for failure to file the statement, and Rs 50,000 for inaccurate information left uncorrected, under the new Act's penalty provisions. This is the same architecture that already makes banks and mutual funds report your transactions automatically. From the next financial year, your Indian crypto platform reports you the same way your bank does.

The cross-border layer is the OECD's Crypto-Asset Reporting Framework (CARF), the crypto equivalent of the CRS regime that already shares bank-account information between countries. India confirmed alignment with CARF in September 2025, joining a group of jurisdictions committed to roll-out, with the Multilateral Competent Authority Agreement expected to be signed in 2026 and the first international exchange of crypto data targeted for around 2027. Once CARF is live, your activity on an Indian exchange could be reported by India to your country of residence, and equally, a CARF-participating foreign exchange could report your activity to its home authority, which may then share it onward. The era in which an NRI could assume their crypto sat in a reporting blind spot is closing. If you have been treating an offshore exchange as invisible to your home tax authority, price in that this changes by roughly 2027, and that CRS already shares your Indian bank balances today, as covered in the residency and reporting guide.

Edge cases

The returning NRI whose residency flips mid-year. This is the most expensive and most common mistake. If you trade offshore crypto in a year in which you become resident in India, perhaps because you returned in October and crossed 182 days, your worldwide crypto income for that whole financial year, including the offshore gains, becomes taxable in India at 30%. The offshore safe harbour evaporates the moment your residency flips. If you are returning, realise offshore crypto gains while you are still firmly non-resident, before the year in which you tip over, or you risk dragging the entire year's global crypto income into the Indian net. RNOR status, which can shelter foreign income for a year or two after return, generally does not help here, because RNOR protects certain foreign income but crypto's treatment under it is untested and the 30% charge is unforgiving.

Crypto received as a gift or as payment. If you receive crypto as a gift, Section 56(2)(x) treats the fair market value above Rs 50,000 from a non-relative as taxable income from other sources, and your cost of acquisition for the later 30% computation becomes the value already taxed, so you are not taxed twice on the same amount. For an NRI, the gift is taxable in India only if the relevant connecting factor is Indian, the same source analysis applies. Crypto received as payment for services is ordinary income first, taxed in the relevant head, with the 30% applying only to the subsequent gain on disposal.

Peer-to-peer and the 194S deduction nobody does. In a P2P trade with an Indian buyer, the buyer is legally required to deduct the 1% TDS, not the exchange. In practice almost nobody does, which leaves a compliance gap that becomes the seller's problem if the Department reconstructs the trade. An NRI selling P2P into India should assume the obligation exists even if the buyer ignores it.

NFTs and tokens are VDAs too. The 30% regime, the 1% TDS, the no-set-off rule and Schedule VDA all apply to NFTs and most tokens, not just to mainstream cryptocurrencies, because the definition of a virtual digital asset is deliberately broad. Do not assume an NFT sale escapes because it is "not crypto".

The closing read

The honest read at the end of Budget 2026 is that India has decided crypto tax policy by inertia. The 30% flat rate, the 1% TDS, and the no-loss-set-off rule are now four years old, survived two consecutive Budgets despite heavy lobbying, and are clearly not changing in the near term. So stop waiting for relief and plan around the rules as they are. The reporting screws, by contrast, are tightening fast, Section 509 from April 2026 and CARF by roughly 2027, so the days of an invisible Indian crypto trail are numbered.

For most NRIs the recommendation is straightforward and turns entirely on jurisdiction, not on the rate. If you are a settled non-resident building a crypto position from abroad, keep it offshore: trade on a foreign exchange, settle to a foreign account, and you keep India out of the picture entirely, with Gulf residents reaching genuine zero and Western residents simply paying at home where they would anyway. Do not volunteer into India's 30% and 1% TDS by using an Indian exchange unless you specifically need to deploy INR sitting in India. If you do have Indian-exchange activity, file the return, report it in Schedule VDA, and reclaim or settle the TDS, because the block-assessment regime now taxes undisclosed crypto at 60% and the platform reports you anyway. And if you are anywhere near returning to India, realise your offshore gains while you are firmly non-resident, because the year your residency flips, your worldwide crypto income walks straight into the Indian net. The one situation that genuinely needs a professional, not a news article including this one, is a returning NRI with a large offshore position and a residency change in play; that is the point to pay a chartered accountant, because the timing alone can be worth lakhs.

Related guides

• NRI crypto and VDA tax: the full mechanics
• Capital gains tax for NRIs on shares and mutual funds
• NRI residency and RNOR rules
• TDS for NRIs and how to claim refunds
• DTAA mechanics: TRC, Form 10F and Section 90
• All News and analysis
• All Taxation guides
• All Investment guides

This guide is news analysis dated early March 2026 and educational in nature. It is not individual tax advice. Crypto taxation for non-residents turns on an unsettled source-of-income question with no statutory situs rule, the law was re-codified into the Income-tax Act, 2025 with effect from 1 April 2026, and reporting obligations under Section 509 and CARF are still being implemented, so confirm your specific position, especially on a large offshore position or a residency change, with a qualified chartered accountant before you act.