Moment guide · FY 2026-27

I hold crypto on foreign exchanges

How is crypto held on foreign exchanges taxed for an NRI or returning resident?

Sec 115BBHSec Schedule FASec FEMAVerified 2026-08-11

Section 115BBH's 30% rate applies to residents of India on VDA gains wherever the exchange is located, so holding crypto abroad does not dodge Indian tax. Foreign crypto exchange accounts are disclosable foreign assets in Schedule FA from your first ROR year, and the cleanest approach is to close foreign VASPs before returning to India. An NRI's position on foreign-held VDA is debated and should be documented.

Your legitimate options

Every route the statute actually gives you — with its condition, cap and deadline.

Route	Condition	Cap / deadline
VDA 30% for residents	While you are a resident of India, gains on virtual digital assets are taxed at 30% u/s 115BBH, wherever the exchange is located	No loss set-off; 1% TDS u/s 194S on transfers
NRI VDA — debated	Whether an NRI's VDA held on a foreign exchange is taxable in India is debated; the source of income and the exchange's location matter	Document the position if you take the non-taxable view
Schedule FA and FEMA	Foreign crypto exchanges are disclosable foreign assets from your first ROR year; holding them as a resident needs FEMA-compliant funding	Close foreign VASPs before becoming ROR where possible

The #1 trap

Assuming a foreign exchange means no Indian tax — section 115BBH applies to residents wherever the VDA is held, so a returning resident who kept coins on Binance or Coinbase still pays 30% on gains. Also, foreign exchange accounts are disclosable foreign assets in Schedule FA from the first ROR year, and the best practice is to close foreign VASPs before returning to avoid both disclosure and FEMA complications.

The decision path

Follow it top to bottom — the first condition that matches is your answer.

IF you are a resident of India → VDA gains are taxed at 30% u/s 115BBH even on foreign exchanges.
IF you are an NRI holding VDA on a foreign exchange → the taxable position is debated; document your reasoning.
IF you become ROR → disclose foreign crypto exchanges in Schedule FA from the first ROR year.
IF you hold a foreign VASP account as a resident → ensure the funding was FEMA-compliant; close it before returning where possible.
IF you sell while resident → 1% TDS u/s 194S applies where the transfer is covered by an Indian intermediary. [VERDICT: residency, not the exchange's location, triggers the 30% rate.]

Worked example

Rahul, returning NRI holding crypto on a US exchange

Rahul worked in the US and holds Bitcoin and Ethereum on a US exchange worth $60,000. He returns to India in May 2025 and becomes a resident. In FY 2025-26 he sells $20,000 worth of Bitcoin for a gain of $8,000, converted at ₹85 per dollar, giving a gain of ₹6,80,000. Under section 115BBH, the gain is taxed at a flat 30% — ₹2,04,000 — because Rahul is a resident of India and the provision applies to virtual digital assets wherever the exchange is located; holding the coins abroad changes nothing. No loss from another crypto can be set off against this gain. Because he is now a resident and ordinarily resident, the US exchange account is a foreign asset and must be disclosed in Schedule FA from his first ROR year. The funding of the account was his US salary, which is FEMA-compliant, but the practical recommendation is to close foreign VASPs before returning, because maintaining them as a resident creates ongoing disclosure and repatriation obligations. His friend, still an NRI, holds VDA on the same exchange and takes the position that gains on the foreign-held asset are not taxable in India while he remains a non-resident; that position is debated, and the friend documents the exchange location, his employment and his residency analysis in case the department asks. Rahul reports the ₹6,80,000 gain in the VDA schedule of his ITR and keeps the exchange statements. A quick call with us dials in the final figure. Rahul also checks whether the US exchange's statements give him the cost basis in USD, because he converts the cost and the sale price at the SBI TT buying rate on the respective transaction dates, and using a single year-end rate distorts the gain. If the exchange does not provide the purchase lots, he reconstructs the cost from his withdrawal records, because the onus is on the taxpayer. The 1% TDS under section 194S applies when an Indian intermediary facilitates the transfer; a direct wallet-to-wallet transfer between residents does not attract the TDS, but the gain is still taxable. If he holds the crypto in a hardware wallet, the wallet is not itself a foreign asset for Schedule FA, but the exchange account holding the coins is. A quick call with us dials in the final figure.

Questions people actually ask

Does holding crypto on a foreign exchange avoid Indian tax?

No — section 115BBH applies 30% tax to VDA gains of Indian residents wherever the exchange is located.

Must I disclose foreign crypto exchanges in Schedule FA?

Yes — as a resident and ordinarily resident, foreign exchange accounts are disclosable foreign assets from your first ROR year.

What is the best practice for returning NRIs with crypto?

Close foreign VASP accounts before returning where possible, and if they are held, ensure FEMA-compliant funding and full Schedule FA disclosure.

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Sections: 115BBH, Schedule FA, FEMA · Last verified 2026-08-11 · Reviewed by Harun Raaj & Associates, Chartered Accountants. Every figure cites the Income-tax Act, 1961 (with ITA 2025 mapping via our section index).