Every filing season, thousands of crypto investors ask the same question: which tax regime will lower their crypto tax? It is a reasonable question. However, the answer is not what most of them expect.
Section 115BBH of the Income Tax Act fixes the tax on Virtual Digital Assets at 30%, plus a 4% health and education cess. This tax rate remains the same under both the old and new tax regimes, so choosing a different regime does not reduce the tax on crypto gains.
However, your crypto gains are rarely the only income on your ITR. The regime you choose this year will directly determine how much tax you pay on your salary, rental income, or fixed deposit returns. This article explains exactly where that decision matters, and how to make it correctly for FY 2025-26.
Key Takeaways
- VDA income is always taxed at 30% + 4% cess under Section 115BBH, regardless of which tax regime you select
- The new tax regime is the default for FY 2025-26; you must actively opt into the old regime at the time of filing your ITR
- The regime decision affects only your non-crypto income, salary, rental income, interest, or business earnings
- Under the new regime, income up to INR 12 lakh is effectively tax-free due to the INR 60,000 rebate under Section 87A. However, this rebate does not apply to VDA gains
- Investors with a home loan, eligible for Section 80C deductions, and a salary above INR 12 lakh may save more under the old regime on their non-crypto income
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What are the Old and New Tax Regimes?
India’s income tax system gives every individual taxpayer a choice between two structures. One rewards disciplined savers through deductions. The other offers lower rates with fewer conditions. For a crypto investor, understanding both is essential before making any filing decision.
What is the Old Tax Regime?
The old tax regime operates under the Income Tax Act, 1961. It has been revised through successive Finance Acts, each adding or refining deductions. For FY 2025-26, it offers over 70 exemptions covering savings, health expenses, and housing costs.
The structure suits investors who actively claim deductions such as provident fund contributions, life insurance, and home loans. Each of these reduces taxable income before the slab rate applies.
Income Tax Rates for FY 2025-2026 as per the Old Tax Regime
For Individuals Below 60 Years:
Income tax table for people below 60 years:
Income Tax Slab | Tax Rate |
Up to INR 2,50,000 | Nil |
INR 2,50,001 – INR 5,00,000 | 5% of excess of INR 2,50,000 |
INR 5,00,001 – INR 10,00,000 | INR 12,500 + 20% of excess of INR 5,00,000 |
Above INR 10,00,000 | INR 1,12,500 + 30% of excess of INR 10,00,000 |
For Senior Citizens aged 60 to 80 Years
Income tax table for people between 60 to 80 years:
Income Tax Slab | Tax Rate |
Up to INR 3,00,000 | Nil |
INR 3,00,001 – INR 5,00,000 | 5% of excess of INR 3,00,000 |
INR 5,00,001 – INR 10,00,000 | INR 10,000 + 20% of excess of INR 5,00,000 |
Above INR 10,00,000 | INR 1,10,000 + 30% of excess of INR 10,00,000 |
For Super Senior Citizens Above 80 Years
Income tax table for people above 80 years:
Income Tax Slab | Tax Rate |
Up to INR 5,00,000 | Nil |
INR 5,00,001 – INR 10,00,000 | 20% of excess of INR 5,00,000 |
Above INR 10,00,000 | INR 1,00,000 + 30% of excess of INR 10,00,000 |
Note: Under the Old Tax Regime, a rebate of up to INR 12,500 is available under Section 87A of the Income Tax Act, 1961, provided the taxable income does not exceed INR 5,00,000.
What is the New Tax Regime?
The new tax regime was introduced under Section 115BAC of the Income Tax Act. It came into effect on 1 April 2020 and was later extended beyond individuals and HUFs to cover Associations of Persons, Bodies of Individuals, and Artificial Juridical Persons.
Budget 2023 made it the default structure for all individual taxpayers. If you file your ITR without selecting a regime, the new regime applies automatically.
Income Tax Rates for FY 2025-2026 as per the New Tax Regime
Here’s the tax slab presented in the budget for 2025:
Income Tax Slab | Tax Rate (All Age Groups) |
Up to INR 4,00,000 | Nil |
INR 4,00,001 – INR 8,00,000 | 5% of excess of INR 4,00,000 |
INR 8,00,001 – INR 12,00,000 | INR 20,000 + 10% of excess of INR 8,00,000 |
INR 12,00,001 – INR 16,00,000 | INR 60,000 + 15% of excess of INR 12,00,000 |
INR 16,00,001 – INR 20,00,000 | INR 1,20,000 + 20% of excess of INR 16,00,000 |
INR 20,00,001 – INR 24,00,000 | INR 2,00,000 + 25% of excess of INR 20,00,000 |
Above INR 24,00,000 | INR 3,00,000 + 30% of excess of INR 24,00,000 |
Note: Under the New Tax Regime, the slab structure is uniform across all age groups. A rebate of up to INR 60,000 is available under Section 87A of the Income Tax Act, 1961, provided the taxable income does not exceed INR 12,00,000.
What are the Key Differences Between the Two Regimes?
The two tax regimes differ not only in tax rates but also in their approach. The old regime encourages taxpayers to save and invest through deductions, while the new regime focuses on simpler tax filing with fewer exemptions and deductions.The table below captures every major difference in one place:
Parameter | Old Tax Regime | New Tax Regime |
Default Status | Optional, must be actively chosen | Default for all individual taxpayers |
Basic Exemption Limit | INR 2.5 lakh | INR 4 lakh |
Standard Deduction under 80DD | INR 50,000 | INR 75,000 |
Section 87A Rebate | INR 12,500 (income up to INR 5 lakh) | INR 60,000 (income up to INR 12 lakh) |
Tax-Free Income Threshold | Up to INR 5 lakh | Up to INR 12 lakh |
Maximum Tax Rate | 30% on income above INR 10 lakh | 30% on income above INR 24 lakh |
Section 80C Deduction | Up to INR 1.5 lakh | Not available |
Section 80D – Medical Insurance | Available | Not available |
HRA Exemption | Available | Not available |
Home Loan Interest – Section 24 | Up to INR 2 lakh | Not available |
NPS – Section 80CCD(1B) | Up to INR 50,000 | Not available |
LTA Exemption | Available | Not available |
Education Loan Interest – Section 80E | Available, no upper limit | Not available |
Employer NPS Contribution | Available | Available |
Family Pension Deduction | INR 15,000 or one-third of pension, whichever is lower | INR 25,000 or one-third of pension, whichever is lower |
Exempt Retirement Benefits | Available | Available |
Documentation Required | High; you’ll need to maintain receipts, statements, and proofs to claim deductions | Minimal |
Switching Flexibility | Annually, for non-business income | Annually, for non-business income |
How is Crypto (VDA) Income Taxed in India?
Before we understand the two regimes through a crypto trader/investor’s lens, it is beneficial to establish what the law says about VDA income. The tax treatment here is unlike any other asset class, and it sits entirely outside the regime comparison.
What is the Tax Rate on VDA Gains?
Section 115BBH of the Income Tax Act imposes a flat 30% tax on gains from the transfer of Virtual Digital Assets. A 4% health and education cess applies on top, bringing the effective rate to 31.2%.
This rate applies to every VDA disposal, including Bitcoin, Ethereum, stablecoins, NFTs, and any other crypto asset covered under Section 2(47A). There is no slab progression, threshold, or age-based concession.
What Can and Cannot be Deducted from VDA Income?
The only deduction permitted against VDA gains is the cost of acquisition. No other expense such as brokerage, transfer fees, or platform charges, can be set off unless you mine cryptos as a business or trade in futures.
Losses from one VDA cannot be set off against gains from another. Further, VDA losses cannot be carried forward to offset income in future years. This makes crypto taxation in India one of the most restrictive frameworks globally.
Does the Regime Choice Affect Your Crypto Tax?
It does not. Section 115BBH is a special provision that operates independently of both regimes. Choosing the old regime does not allow you to apply slab rates to VDA gains. Similarly, choosing the new regime does not reduce the 30% rate either.
The regime decision has no bearing whatsoever on the tax you owe on crypto gains. However, as the following sections explain, it has a direct and significant bearing on everything else in your ITR.
How Does the Regime Choice Affect a Crypto Investor Other Income?
Most crypto investors in India have other sources of income besides crypto, such as salary, rent, or business earnings. The tax regime they choose affects how this income is taxed, and the difference in tax payable can be substantial. Let’s understand how different income tax regime affects different incomes:
Crypto Investors With Salary Income
For a salaried investor, the regime choice determines which deductions can be applied against employment income. The old regime rewards structured savers through home loan interest, insurance premiums, and 80C investments. The new regime offers a higher standard deduction and lower slab rates, with no additional documentation required.
Example
Aarav is a salaried professional earning INR 16,00,000 per year. He made a VDA gain of INR 4,00,000 during FY 2025-26. He has a home loan with INR 1,50,000 in annual interest, Section 80C investments of INR 1,50,000, and a health insurance premium of INR 25,000. Here’s how he pays taxes as per both regimes:
Particulars | Old Tax Regime | New Tax Regime |
Gross Salary | INR 16,00,000 | INR 16,00,000 |
Less: Standard Deduction | INR 50,000 | INR 75,000 |
Less: Section 80C | INR 1,50,000 | Not applicable |
Less: Section 24 (Home Loan Interest) | INR 1,50,000 | Not applicable |
Less: Section 80D (Health Insurance) | INR 25,000 | Not applicable |
Taxable Salary Income | INR 12,25,000 | INR 15,25,000 |
Tax Slab Breakdown | 5% on INR 2,50,001–5,00,000 = INR 12,500 20% on INR 5,00,001–10,00,000 = INR 1,00,000 30% on INR 10,00,001–12,25,000 = INR 67,500 | 5% on INR 4,00,001–8,00,000 = INR 20,000 10% on INR 8,00,001–12,00,000 = INR 40,000 15% on INR 12,00,001–15,25,000 = INR 48,750 |
Tax on Salary | INR 1,80,000 | INR 1,08,750 |
Add: 4% Cess on Salary Tax | INR 7,200 | INR 4,350 |
Total Tax on Salary | INR 1,87,200 | INR 1,13,100 |
VDA Gain | INR 4,00,000 | INR 4,00,000 |
Tax on VDA at 30% (Section 115BBH) | INR 1,20,000 | INR 1,20,000 |
Add: 4% Cess on VDA Tax | INR 4,800 | INR 4,800 |
Gross VDA Tax | INR 1,24,800 | INR 1,24,800 |
Less: TDS Deducted by Exchange (Section 194S) | INR 4,000 | INR 4,000 |
Net VDA Tax Payable | INR 1,20,800 | INR 1,20,800 |
Combined Net Tax Liability | INR 3,08,000 | INR 2,33,900 |
For Aarav, the new regime produces a significantly lower combined liability of INR 2,33,900 against INR 3,08,000 under the old regime. Although the old regime reduces his taxable salary to INR 12,25,000 through deductions, the slab rates on that income, 5%, 20%, and 30%, produce a higher tax than the new regime’s progressive structure on INR 15,25,000. The VDA tax of INR 1,20,800 remains identical under both regimes after deducting the Section 194S TDS credit.
Crypto Investor With Freelance or Business Income
For investors earning freelance or business income, the regime choice carries an additional consequence beyond tax savings. Individuals with business income who opt out of the new regime can return to it only once in their lifetime. This restriction makes the initial decision far more consequential than it is for salaried investors.
Example
Rohan is a freelance designer earning INR 18,00,000 per year. He made a VDA gain of INR 3,00,000 during FY 2025-26. He has Section 80C investments of INR 1,50,000 and a health insurance premium of INR 25,000. His exchange deducted 1% TDS under Section 194S on his VDA transfers during the year amounting to INR 3000.
Particulars | Old Tax Regime | New Tax Regime |
Gross Freelance Income | INR 18,00,000 | INR 18,00,000 |
Less: Standard Deduction | Not applicable | Not applicable |
Less: Section 80C | INR 1,50,000 | Not applicable |
Less: Section 80D (Health Insurance) | INR 25,000 | Not applicable |
Taxable Business Income | INR 16,25,000 | INR 18,00,000 |
Tax Slab Breakdown | 5% on INR 2,50,001–5,00,000 = INR 12,500 20% on INR 5,00,001–10,00,000 = INR 1,00,000 30% on INR 10,00,001–16,25,000 = INR 1,87,500 | 5% on INR 4,00,001–8,00,000 = INR 20,000 10% on INR 8,00,001–12,00,000 = INR 40,000 15% on INR 12,00,001–16,00,000 = INR 60,000 20% on INR 16,00,001–18,00,000 = INR 40,000 |
Tax on Business Income | INR 3,00,000 | INR 1,60,000 |
Add: 4% Cess on Business Tax | INR 12,000 | INR 6,400 |
Total Tax on Business Income | INR 3,12,000 | INR 1,66,400 |
VDA Gain | INR 3,00,000 | INR 3,00,000 |
Tax on VDA at 30% (Section 115BBH) | INR 90,000 | INR 90,000 |
Add: 4% Cess on VDA Tax | INR 3,600 | INR 3,600 |
Gross VDA Tax | INR 93,600 | INR 93,600 |
Less: TDS Deducted by Exchange (Section 194S) | INR 3,000 | INR 3,000 |
Net VDA Tax Payable | INR 90,600 | INR 90,600 |
Combined Net Tax Liability | INR 4,02,600 | INR 2,57,000 |
For Rohan, the new regime produces a substantially lower combined liability of INR 2,57,000 against INR 4,02,600 under the old regime, a difference of INR 1,45,600. Two factors drive this gap.
First, the standard deduction of INR 75,000 does not apply to freelance or business income under either regime, meaning Rohan receives no relief on that front.
Second, the old regime’s deductions of INR 1,75,000 reduce his taxable income to INR 16,25,000, but the 30% slab rate produces a tax of INR 3,00,000, nearly double the new regime’s liability on the full INR 18,00,000.
The VDA tax of INR 90,600 remains identical under both regimes after the Section 194S TDS credit.
Crypto Investor With Interest or Rental Income
For investors earning income from fixed deposits, savings accounts, or rental properties, the regime choice determines whether deductions such as Section 80TTA, standard rental deduction, or 80C investments can be applied. The new regime’s higher rebate threshold is particularly relevant for investors whose total non-crypto income falls below INR 12,00,000.
Example
Meera is a passive investor earning INR 6,00,000 in fixed deposit interest annually. She made a VDA gain of INR 5,00,000 during FY 2025-26. She has Section 80C investments of INR 1,50,000 and a health insurance premium of INR 25,000. Her exchange deducted 1% TDS under Section 194S on her VDA transfers during the year amounting to INR 5000.
Particulars | Old Tax Regime | New Tax Regime |
Gross Interest Income | INR 6,00,000 | INR 6,00,000 |
Less: Section 80C | INR 1,50,000 | Not applicable |
Less: Section 80D (Health Insurance) | INR 25,000 | Not applicable |
Taxable Interest Income | INR 4,25,000 | INR 6,00,000 |
Tax Slab Breakdown | Up to INR 2,50,000 – NIL 5% on INR 2,50,001–5,00,000 = 1,75,000 x 5% = INR 8750 | Up to INR 3,00,000 – NIL 5% on INR 3,00,001–6,00,000 = INR 3,00,000 × 5% = INR 15,000 |
Tax on Interest Income | INR 8,750 | INR 15,000 |
Less: Section 87A Rebate | INR 8,750 | INR 15,000 |
Add: 4% Cess | INR 0 | INR 0 |
Total Tax on Interest Income | Nil | Nil |
VDA Gain | INR 5,00,000 | INR 5,00,000 |
Tax on VDA at 30% (Section 115BBH) | INR 1,50,000 | INR 1,50,000 |
Add: 4% Cess on VDA Tax | INR 6,000 | INR 6,000 |
Gross VDA Tax | INR 1,56,000 | INR 1,56,000 |
Less: TDS Deducted by Exchange (Section 194S) | INR 5,000 | INR 5,000 |
Net VDA Tax Payable | INR 1,51,000 | INR 1,51,000 |
Combined Net Tax Liability | INR 1,51,000 | INR 1,51,000 |
For Meera, both regimes produce the same combined tax liability. The old regime reduces taxable interest income through deductions, while the new regime eliminates it entirely through the Section 87A rebate. The Section 194S TDS credit of INR 5,000 reduces her net VDA liability equally under both regimes. In either case, the VDA tax remains the dominant outflow and is entirely unaffected by the regime choice.
Which Tax Regime Should a Crypto Investor Choose in FY 2025-26?
The regime comparison is not a blanket answer for every investor. It depends on one central question: how much non-crypto income do you earn, and how much of it is eligible for deductions? Answering that question honestly will guide you towards the right option. Here’s which regime suits the following investor profiles:
Regime Recommendation by Investor Profile
Investor Profile | Recommended Regime |
Crypto-only income, no major deductions | New Regime |
Salary below INR 12 lakh, minimal deductions | New Regime |
Salary above INR 12 lakh with home loan and 80C | Old Regime – evaluate |
FD or rental income, no significant deductions | New Regime |
Business income with high deductible expenses | Old Regime – evaluate carefully |
Business income with minimal deductions | New Regime – retain flexibility |
If You Have Mostly Crypto Income and Little Else Income
For investors whose primary income is from crypto trading and who hold no home loan, pay no insurance premiums, and make no 80C investments, the old regime offers very little advantage.
The new regime’s higher standard deduction of INR 75,000 and the INR 60,000 rebate under Section 87A make it the more practical and tax-efficient choice. Simpler compliance is an additional benefit.
If You Have Salary Above INR 12 Lakh With Deductions
If your salary is above INR 12 lakh, the Section 87A rebate under the new regime no longer applies. At this income level, the old regime’s deductions can meaningfully reduce taxable income.
A taxpayer with a home loan, NPS contributions, and active 80C investments can potentially reduce their taxable salary by INR 3.5 lakh to INR 4 lakh under the old regime. That saving is entirely separate from the 30% VDA tax, which remains unchanged.
If You Have Business Income and Crypto Gains
Business income earners carry a switching restriction that salaried investors do not. Choosing the old regime locks them out of the new regime for all future years except one reversal opportunity.
Given this constraint, business income earners with substantial deductible expenses might find the old regime beneficial. However, those without significant deductions should choose the new regime initially, since it preserves long-term flexibility.
How to Switch Between Tax Regimes While Filing Your ITR?
Switching between the two regimes is not a complicated process, but the rules differ depending on your income type. Understanding the correct procedure before filing prevents mismatches, missed deadlines, and irreversible decisions, particularly for investors with business income.
For Salaried Individuals and Non-Business Income Earners
Salaried investors and those with only investment or interest income have the most flexibility. The regime switch requires no separate application, no prior approval, and no communication with the Income Tax Department outside of the ITR itself.
Steps to Switch your Regime While Filing:
- Log in to the Income Tax e-Filing Portal
- Select the applicable ITR form, ITR-2 for capital gains income, including VDA gains
- Navigate to the regime selection step within the form
- Select your preferred regime, old or new, for FY 2025-26
- Complete the return and submit before the due date of 31 July 2026
The selection made at this step overrides any declaration made to your employer at the start of the year. You may choose a different regime each financial year without any restriction.
For Individuals With Business or Professional Income
The switching rules for business income earners are significantly stricter. Investors who earn freelance, trading, or professional income alongside crypto gains must note the following before making any regime decision:
- The new tax regime is the default. If you do not actively choose the old regime, the new regime applies automatically.
- If you opt for the old regime, you may return to the new regime only once in your lifetime.
- After that single reversal, the old regime will become permanent for all subsequent years.
- To opt for the old regime as a business income earner, Form 10-IEA must be filed on or before the ITR due date.
- Missing the Form 10-IEA deadline means the new regime applies for that year, regardless of intent.
When your income spans VDA gains, salary, and business earnings across multiple sources, computing the correct liability under either regime is not a single-step process. KoinX consolidates every income head, computes your VDA tax accurately, and gives you the verified figures you need to make the regime switch with complete confidence.
How KoinX Helps Crypto Investors File Accurately Under Either Regime?
When your income spans crypto gains across multiple platforms and salary or business income subject to a regime decision, computing the correct liability is not a single-step process. KoinX is a global crypto tax platform trusted by over 1.5 million users across 100+ countries, with 800+ exchange and wallet integrations.
For Indian investors, it generates ITR-ready Schedule VDA reports, computes the 30% VDA tax accurately, and presents your figures in the exact format the ITD expects, regardless of which regime you file under.
Automatic Import from 800+ Exchanges and Wallets
KoinX connects directly to exchanges such as CoinDCX, CoinSwitch, Binance, Bybit, and Coinbase via API and CSV import. Every trade, transfer, staking receipt, and fiat conversion is pulled into a single consolidated timeline. The VDA gain or loss figure you need for Schedule VDA is computed automatically, with no manual aggregation required.
ITR-Ready Schedule VDA Reports
TDS Reconciliation for Section 194S
Every 1% TDS deducted by a registered Indian exchange under Section 194S appears in your Form 26AS. KoinX reconciles your TDS credits against your computed VDA liability, flagging any mismatches before you file. This ensures your credit claim is accurate and reduces the risk of a demand notice post-filing.
Side-by-Side Regime Comparison for Non-Crypto Income
KoinX flags the VDA component of your total income as a fixed liability and separates it clearly from your other income heads. This gives you an accurate base figure to carry into your regime comparison, ensuring the decision is made on the correct numbers rather than an estimate.
Your VDA tax is already decided; make sure the rest of your ITR is, too. Generate your crypto tax report on KoinX and file with complete confidence under whichever regime suits you.
Conclusion
Choosing the wrong regime does not change your crypto tax. However, it can mean paying more than necessary on every other rupee you earned this year. The window to make that choice correctly closes on the ITR filing deadline, and once submitted, the selection cannot be revised.
The first step is a clean, accurate VDA calculation, every trade, transfer, and gain accounted for. Once that figure is confirmed, the regime comparison for your remaining income becomes simple. KoinX handles the VDA computation automatically and gives you the consolidated numbers you need to make that regime decision with confidence. Get started with KoinX today and make your crypto tax filing easier than before.
Frequently Asked Questions
I Have Only Crypto Income and No Salary - Which Regime Should I Choose?
If crypto gains are your sole income, the regime choice has no effect on your VDA tax. However, your regime still determines how any other income, savings account interest, fixed deposit returns is taxed. For most investors in this position with no significant deductions, the new regime is the simpler and more practical choice.
Will the 30% Tax on Crypto Change If the Government Revises the Regime Slabs?
No. The 30% rate on VDA income is governed by Section 115BBH, which is a standalone provision independent of both regime structures. A revision to either regime’s slab rates would have no effect on crypto taxation unless Parliament separately amends Section 115BBH itself.
I Filed Under the New Regime Last Year but Want to Switch to the Old Regime This Year. Is that Allowed?
Yes, provided you do not have business or professional income. Salaried individuals and those with only investment income can switch freely between regimes each financial year at the time of filing. The choice made in FY 2024-25 does not bind you for FY 2025-26.
My Employer Deducted TDS Under the New Regime but I Want to File Under the Old Regime. What Happens?
You can still switch to the old regime at the time of filing your ITR. If your deductions under the old regime reduce your tax liability below the TDS already deducted by your employer under Section 192, the excess will appear as a refund in your ITR. This is a routine adjustment and does not create any compliance issue.
Can I Claim Section 80C Deductions Against My Crypto Income?
No. Section 115BBH permits only one deduction against VDA income: the cost of acquisition. All other deductions, including 80C investments, are disallowed against crypto gains. However, if you opt for the old tax regime, Section 80C deductions remain available against your salary or other non-crypto income.
