Claim audit · FY 2026-27

“Show your crypto losses to reduce your taxable income”

DisallowedAudited: 2026-08-09

The condition that decides it

VDA losses cannot be set off against anything — not other income, not even other crypto gains — and cannot be carried forward (s.115BBH(2)). Only cost of acquisition is deductible. Reporting the loss honestly is fine; using it to cut other income is impermissible.

What the department sees

Exchange SFT, 1% TDS trail u/s 194S, AIS

Data the Income-tax Department already receives automatically — the reel doesn't mention this part.

The real math

The reel implies a ₹2,00,000 VDA loss can reduce salary or another crypto gain. Section 115BBH permits only cost of acquisition as a deduction and section 115BBH(2) bars loss set-off and carry-forward. If VDA A has sale value ₹1,00,000 and cost ₹3,00,000, the arithmetic loss is ₹1,00,000 − ₹3,00,000 = −₹2,00,000. That −₹2,00,000 cannot reduce salary of ₹12,00,000: permitted reduction ₹0, so salary remains ₹12,00,000. It also cannot reduce a separate VDA gain of ₹1,50,000; taxable VDA gain remains ₹1,50,000 before the 30% rate, giving ₹1,50,000 × 30% = ₹45,000 before surcharge or cess. Section 194S creates a 1% TDS trail, not a loss deduction. The exchange statement can still be retained to report the transaction accurately. Reporting the loss is different from using it.

Questions people actually ask

Can crypto loss reduce salary?

Section 115BBH(2) disallows VDA-loss set-off against salary and other income. Salary remains unchanged by the crypto loss.

Can one crypto loss reduce another crypto gain?

Section 115BBH(2) bars set-off even against another VDA gain. Only cost of acquisition is deductible when computing the gain.

Can crypto loss be carried forward?

Section 115BBH(2) does not permit carry-forward of VDA losses. Section 194S’s 1% TDS trail does not change that result.

Sections: 115BBH, 2(47A), 194S · We audit claims, not creators. Reviewed by Harun Raaj & Associates, Chartered Accountants · All audited claims