NRI Crypto and VDA Taxation: India's 30% Rate, US Property Rules, and the FBAR Gap Explained

You bought Bitcoin in 2020, held it through the chaos of 2021, and accumulated more on Coinbase over the next three years. You are now a US green card holder with an eye on returning to India in the next two years, and you have just noticed that India introduced a 30% flat tax on crypto gains in April 2022 with no provision to set off losses and no indexation. You are also faintly aware that the IRS has opinions about crypto. What you are less sure about is whether the two regimes overlap, which country gets to tax what, and whether you have any structuring choices left before you board the plane. The answer is that you have real choices, the regimes do not neatly dovetail, and the RNOR window is a genuine planning tool if you use it before becoming fully resident.

The 30-second answer: India taxes Virtual Digital Asset (VDA) gains at a flat 30% under Section 115BBH from 1 April 2022, with no loss set-off and no deduction except cost of acquisition. A 1% TDS applies under Section 194S to buyers of crypto. The 30% applies to an NRI only on India-source crypto income: crypto held on an Indian exchange. Crypto held on a foreign exchange or self-custodied wallet is foreign-source income, not taxable in India for an NRI. In the US, the IRS treats crypto as property (Notice 2014-21): short-term gains are ordinary income, long-term gains are taxed at 15% or 20%. Foreign crypto accounts are not yet required on FBAR or Form 8938 under current rules, though final rulemaking is pending. No DTAA, including the India-US treaty, specifically covers VDAs. The RNOR window is the primary planning tool for returning NRIs: sell foreign crypto during RNOR and keep proceeds offshore to pay zero India tax.

This guide separates the Indian and US regimes, explains the source-based rule that determines which country's tax applies to an NRI, walks through the FBAR and Form 8938 position as it currently stands, addresses the DTAA gap honestly, and ends with a detailed worked example for a returning NRI deciding whether to sell before or after moving back.

India's VDA tax regime: Section 115BBH and Section 194S

The Finance Act 2022 inserted Section 2(47A) into the Income Tax Act to define Virtual Digital Assets, and it is broad. The definition covers any information, code, number, or token generated through cryptographic means, any non-fungible token, and any other digital asset notified by the Central Government. In plain terms: Bitcoin, Ethereum, altcoins, NFTs, and whatever the government later chooses to notify. Traditional currencies and their electronic forms are excluded.

Section 115BBH sets the rate at 30% on gains from the transfer of a VDA. No deduction is allowed except the cost of acquisition, the original purchase price. This means:

• No deduction for brokerage or transaction fees.
• No deduction for internet costs, hardware, or any other expense of holding.
• No indexation benefit to inflate the cost with inflation.
• No exemption under Section 10 on any amount.

The no-loss provision is the one that surprises most people. Losses from the transfer of one VDA cannot be set off against gains from another VDA, and cannot be set off against any other income. If you sold Bitcoin at a Rs 5,00,000 gain and Ethereum at a Rs 2,00,000 loss in the same year, you pay 30% on Rs 5,00,000. The Ethereum loss is stranded. You cannot carry it forward to the next year either: Section 115BBH(2)(b) prohibits the carry-forward of VDA losses.

Section 194S addresses tracking, not just revenue. The buyer of a VDA must deduct 1% TDS at source and deposit it with the government. The threshold is Rs 50,000 per year for peer-to-peer transactions where neither party is a business (reduced to Rs 10,000 when either party is a specified person, essentially a business transacting in crypto). The purpose is to build a transaction trail in a space that was previously largely invisible. For an NRI selling crypto on an Indian exchange, the exchange handles the TDS deduction on your behalf: the 1% is deducted from each sale and credited to your Form 26AS and Annual Information Statement (AIS). You claim that TDS credit against your 30% liability when you file your India return.

Who is an NRI for India VDA tax purposes?

India taxes non-residents on India-source income only. This is the foundational rule that governs whether any of this applies to you.

An NRI's residency status under Section 6 of the ITA is determined by days of physical presence in India, not by the country of employment or domicile. If you are an NRI, your India tax liability is confined to income that arises or accrues in India, or is deemed to do so.

For crypto, the source question resolves to: where is the crypto held and transacted?

Crypto on an Indian exchange (CoinDCX, WazirX, Zebpay, CoinSwitch): This is India-source income. The exchange operates in India, your account is India-domiciled, and the transaction is treated as taking place in India. When you sell, the gain is taxable in India at 30% under Section 115BBH, regardless of your country of residence. The 1% TDS is deducted by the exchange. You must file an India ITR (ITR-2 or ITR-3 as applicable) and report under Schedule VDA.

Crypto on a foreign exchange (Coinbase, Kraken, Binance, OKX) or in a self-custodied wallet (Ledger, Trezor, MetaMask): This is foreign-source income. For an NRI, foreign-source income from investments is not taxable in India. When you sell Bitcoin from your Coinbase account while you are an NRI, India has no claim on that gain. No ITR obligation arises for that transaction in India, and no 1% TDS applies.

Returning NRI who becomes a resident: The moment you become India-resident, your global income is taxable in India. Crypto gains wherever held, whether Coinbase, Kraken, or a hardware wallet in your drawer, are taxable at 30% in India once you are fully resident. This is the tax event most returning NRIs are unprepared for.

RNOR window: Section 6(6) of the ITA provides that a person is RNOR (Resident but Not Ordinarily Resident) if they have been an NRI for nine of the preceding ten years, or their total India-presence over the preceding seven years is 729 days or fewer. A typical NRI returning after many years outside India qualifies as RNOR for two consecutive financial years. During RNOR status, income that is foreign-source and not received or deemed received in India is exempt. Crypto held on a foreign exchange, sold during RNOR, with proceeds kept outside India: zero India tax. This is the planning window. Once the RNOR period ends, you are fully resident and global crypto gains belong to India at 30%.

The US treatment of crypto for NRIs

For NRIs who are US persons, meaning US citizens, green card holders, or those who meet the substantial presence test, the IRS classification controls.

IRS Notice 2014-21 established that cryptocurrency is treated as property, not currency, for US federal tax purposes. The consequences are:

• Every sale, swap, or conversion of crypto is a taxable event.
• Short-term capital gain: crypto held for one year or less. The gain is treated as ordinary income, taxed at your marginal rate (10% to 37% for 2026).
• Long-term capital gain: crypto held for more than one year. The gain is taxed at 0%, 15%, or 20% depending on total taxable income. For most NRIs in professional employment, the relevant LTCG rate is 15% or 20%.
• Losses can be deducted and can offset other capital gains. Excess losses can offset up to $3,000 of ordinary income per year, with the remainder carried forward. This is the fundamental structural difference from India's 30% flat rate with no loss set-off.
• Crypto-to-crypto swaps are taxable. Exchanging Bitcoin for Ethereum is a disposal of Bitcoin at fair market value; you recognise a gain or loss.

The rate comparison matters for a returning NRI: US LTCG at 20% is materially lower than India's 30% flat rate with no loss offset. If you are going to pay tax on the gain somewhere, the US regime is cheaper, at least for long-held assets.

FBAR and Form 8938: the current position on foreign crypto

This is the area with the most genuine uncertainty, and it is important to state it accurately rather than extrapolate.

FBAR (FinCEN Form 114): FinCEN published a notice in 2020 stating its intent to require FBAR reporting for foreign virtual currency accounts in the future, and proposed formal rulemaking in 2023. As of mid-2026, the final rule has not been enacted. FinCEN's existing guidance explicitly acknowledges that virtual currency is not currently required to be reported on the FBAR. Foreign crypto held at a foreign exchange, therefore, is not currently required to be reported on FBAR under existing rules.

Self-custodied wallets, Ledger, Trezor, MetaMask, and similar, involve no financial institution. There is no account, no institution, no balance in the financial-account sense. These are also not currently FBAR reportable, and there is no proposal that would capture wallets with no institutional counterparty.

Crypto held on a US exchange (Coinbase, Kraken, both US-domiciled) is a domestic account. There is no FBAR obligation for domestic accounts regardless of what assets they hold.

Form 8938 (FATCA): The existing Form 8938 instructions do not explicitly include foreign virtual currency accounts as specified foreign financial assets, though the IRS has indicated that future guidance may treat them as such. At present, foreign crypto accounts at foreign exchanges are not explicitly required on Form 8938.

What this means practically: A US-person NRI with crypto at Coinbase (US exchange) has no FBAR or Form 8938 obligation for that account. A US-person NRI with crypto at Binance (foreign exchange, BVI-domiciled) is not currently required to report that account on FBAR or Form 8938, but this position is subject to change when final rulemaking occurs. Given the direction of travel, keeping crypto at a US-domiciled exchange eliminates the reporting question entirely.

What does not change: the US capital gains tax obligation. Whether your crypto sits at Coinbase or Binance, if you are a US person and you sell at a gain, you owe US tax. The FBAR and Form 8938 questions are about disclosure of the account, not about whether the gain is taxable.

The DTAA gap: no treaty protection for VDAs

Every NRI who has been through a cross-border tax calculation eventually reaches for a Double Taxation Avoidance Agreement. For crypto, that reflex leads nowhere useful.

No tax treaty, including the India-US DTAA signed in 1989 and amended in 2006, contains an article specifically covering virtual digital assets, cryptocurrency, or any equivalent concept. The DTAA predates these assets entirely.

The relevant article for capital gains in the India-US DTAA is Article 13, which covers gains from the alienation of property. Article 13(4) provides that gains from the alienation of property not specified in Articles 13(1) through 13(3), which cover immovable property, business assets, and shares in property-rich companies, are taxable only in the state of which the alienator is a resident. The logic would suggest that, for an India-resident NRI selling crypto, the gain is taxable only in India under Article 13(4), potentially relieving US tax if the person has already become India-resident and is no longer a US person.

The problem is threefold. First, this interpretation is unsettled: no revenue authority has issued a binding ruling applying Article 13(4) to VDAs. Second, US citizens and green card holders owe US tax on worldwide income regardless of residency, so the DTAA residency-tiebreaker does not eliminate US exposure for them. Third, the DTAA does not address India's TDS mechanism, the rate, or the no-loss-set-off provision.

Do not rely on the DTAA as a planning tool for crypto without a specific written opinion from a CA or CPA with treaty experience in this area. The DTAA gap is real, and the cost of getting it wrong exceeds the cost of the professional advice.

1% TDS mechanics for NRIs with Indian exchange accounts

If you maintain a KYC-verified account on an Indian exchange, the TDS mechanics work as follows.

The exchange acts as the deductor under Section 194S. On every sale transaction, 1% of the sale consideration is withheld before the net proceeds reach your account. The exchange is required to deposit this TDS with the government and issue a TDS certificate (Form 16A). The deducted amount appears in your Form 26AS and Annual Information Statement (AIS), both accessible through the Income Tax India portal.

When you file your India ITR for the relevant assessment year, you report each VDA transaction in Schedule VDA (introduced in ITR-2 for AY 2023-24 onward). The Schedule requires: name of VDA, date of acquisition, cost of acquisition, date of transfer, and sale consideration. The gain for each transaction is computed at 30%, aggregated, and the total TDS already deducted is claimed as a credit against the resulting tax liability. Advance tax rules apply: if your total India tax liability (from all heads, including VDA) exceeds Rs 10,000, you are required to pay advance tax in four instalments.

A practical point on no-gain transactions: even if you made no net gains or incurred only losses on your Indian exchange during the year, you must report transactions in Schedule VDA if any transactions took place. The ITR is not optional simply because the outcome is nil or negative. File the return, disclose the transactions, and carry the loss forward in the schedule even though you cannot use it.

Reporting in India ITR: Schedule VDA

Schedule VDA was added to ITR-2 and ITR-3 starting from AY 2023-24 (for income from FY 2022-23 onward). It is a transaction-level disclosure requirement, not just a summary. You report each VDA transfer separately with:

• VDA type (Bitcoin, Ethereum, NFT, etc.)
• Date and cost of acquisition
• Date of transfer
• Sale consideration
• Gain (always treated as short-term regardless of holding period; there is no LTCG rate for VDAs)

The 30% rate applies to the total of all gains computed in Schedule VDA. The TDS credits from Form 26AS are applied. If any advance tax was paid, that is credited as well. Net tax payable is included in the overall ITR computation.

No loss netting is done at the Schedule VDA stage. Each gain is a positive entry; each loss does not cancel a gain. The resulting Schedule VDA total feeds directly into the tax computation at 30%, and any loss in the schedule is noted but not set off.

Worked example: Nikhil's return and the three-option analysis

Nikhil, 34, is a US green card holder returning to India permanently in March 2026. He plans to settle, so Green Card relinquishment is a future possibility but not immediate. He holds:

• 1 BTC purchased in 2020 at $12,000. Current value: $65,000. Gain: $53,000. Held more than one year: LTCG.
• 2 BTC purchased in June 2024 at $45,000 each. Current value: $65,000 each. Gain: $40,000 total. Held less than one year as of March 2026: STCG.

He has no Indian exchange holdings. All crypto is at Coinbase.

Option 1: Sell all before departing the US (January-February 2026).

He is a US person and US-resident. Coinbase is a US exchange. There is no India-source income involved.

• 1 BTC gain: $53,000 at 20% LTCG rate = $10,600 US tax
• 2 BTC gain: $40,000 at 24% ordinary income rate (STCG, held under one year) = $9,600 US tax
• Total US tax: $20,200
• India tax: he is an NRI at the time of sale. Coinbase is a foreign (US) exchange from India's perspective. Foreign-source income of an NRI: zero India tax

This is clean and certain. The downside is the STCG rate on the 2024 BTC. If he could wait until June 2026 (one year from purchase), those 2 BTC would become LTCG at 20%, saving roughly $1,600 in US tax.

Option 2: Hold during RNOR, sell in FY 2026-27 or FY 2027-28.

He returns in March 2026. His India tax year runs April to March. For FY 2026-27, he qualifies as RNOR (he was an NRI for more than nine of the preceding ten years). He sells 1 BTC in July 2026 from Coinbase, depositing proceeds in his US bank account without remitting to India.

• India tax: RNOR, foreign income not received in India: zero India tax
• US tax: he remains a US person (Green Card). $53,000 LTCG at 20% = $10,600 US tax. Note: no India tax credit available since India imposed no tax.

For the 2 BTC purchased June 2024: by June 2026, they are now held more than one year. He sells in August 2026.

• US tax: $40,000 LTCG at 20% = $8,000 US tax (compared to $9,600 STCG in Option 1)
• India tax: RNOR, foreign income not received in India: zero India tax

Total US tax under Option 2: $18,600 (versus $20,200 under Option 1). The RNOR window combined with waiting for LTCG treatment saves $1,600. The cost is timing: you are holding unhedged crypto through the RNOR period and betting that prices hold.

Option 3: Relinquish Green Card before departure, then sell during RNOR.

This requires an independent decision about the Green Card, which has immigration and life consequences far beyond crypto tax. But the tax arithmetic is:

If Nikhil relinquishes the Green Card before or shortly after leaving the US and is no longer a US person, the US no longer taxes his worldwide income (other than US-source income).

• He sells 1 BTC and 2 BTC during RNOR from Coinbase (non-India exchange), keeps proceeds offshore.
• India tax: RNOR, foreign income not received in India: zero India tax
• US tax: not a US person, no US-source income from a foreign exchange sale: zero US tax

Total tax on $93,000 of crypto gains: zero, under Option 3, if Green Card relinquishment is otherwise appropriate.

This outcome sounds appealing, but it requires the Green Card relinquishment to be genuine and complete, and there are separate exit tax considerations under Section 877A if Nikhil qualifies as a "covered expatriate." That is a separate analysis.

Summary of options:

Option	US Tax	India Tax	Conditions
Sell before US departure	$20,200	Zero	Certain, no timing risk
Hold through RNOR, LTCG	$18,600	Zero	Price risk; RNOR confirmed
Relinquish GC, sell RNOR	Zero	Zero	Immigration decision required; exit tax check needed

Edge cases and situations you will encounter

Crypto gifting: Gifts received by an India-resident (or NRI who becomes resident) are taxable if the fair market value of all gifts received in a year exceeds Rs 50,000, and VDAs received as gifts are included in this computation. The fair market value of the crypto on the date of receipt is the taxable amount. An NRI receiving a crypto gift from abroad while still an NRI is not subject to India gift tax (Section 56(2)(x) applies to residents), but becomes liable the moment they transition to resident status.

Crypto in estate planning: India has no specific succession law for cryptocurrency. A private key is effectively a bearer instrument: whoever holds the key controls the asset. An NRI with material crypto holdings should ensure that private keys and recovery phrases are documented in a form accessible to the executor under their will, whether held in India or abroad. Probate processes in India do not currently have a standard mechanism for dealing with self-custodied assets. If holdings are substantial, legal advice on the estate structure is warranted before reliance is placed on a standard will.

UK-resident NRIs: HMRC treats cryptocurrency as a capital asset subject to Capital Gains Tax. The current UK CGT rates for 2026-27 are 18% for basic-rate taxpayers and 24% for higher or additional-rate taxpayers. The UK-India DTAA does not cover VDAs specifically. UK NRIs considering return to India have the same RNOR planning opportunity: sell foreign crypto during RNOR, keep proceeds offshore, pay UK CGT but zero India tax.

UAE-resident NRIs: The UAE levies no personal income tax and no capital gains tax on individuals. There is no crypto gain exposure in the UAE. However, the Corporate Tax enacted in June 2023 applies to businesses, and a UAE-resident NRI who trades crypto at a volume sufficient to be characterised as a business (a fact-specific question) could face UAE Corporate Tax at 9%. For the typical NRI investor, this is not a concern. Returning to India from the UAE creates the largest single India tax event: the moment you become India-resident, your global crypto gains are taxable at 30%. The RNOR window is the only buffer.

Multiple VDA types and netting: The no-set-off rule applies across all VDA types. If you hold ten different tokens and nine of them generate losses while one generates a gain, you pay 30% on the gain and absorb the losses in full. There is no averaging. This is different from the equity capital gains framework, where STCG losses can be set off against STCG gains, and LTCG losses can be set off against LTCG gains. For VDAs, every gain is taxed and every loss is dead.

1% TDS on peer-to-peer trades: If you sell crypto directly to another individual (not through an exchange), and the buyer is not a specified entity under Section 194S, the buyer is responsible for deducting 1% TDS before paying you. In practice, peer-to-peer TDS compliance is patchy, but the obligation exists. If a buyer does not deduct TDS and the transaction comes to the department's attention, the department can demand TDS plus interest from the buyer. As the seller, you are required to disclose the transaction in Schedule VDA regardless of whether TDS was deducted.

The closing read

India's 30% flat rate on VDA gains is among the most aggressive crypto tax regimes globally. The no-loss set-off and no-indexation provisions mean that a volatile asset class is taxed on every upswing with no credit for the downswings. For an NRI on an Indian exchange, this is unavoidable once the transaction is made. For an NRI on a foreign exchange, India does not have a claim, which is the cleaner position to be in while you are a non-resident.

For US-person NRIs, the FBAR and Form 8938 landscape is genuinely unsettled. The responsible position is to track proposed rulemaking and ensure your CPA is aware of your foreign exchange holdings, even though reporting is not currently required, precisely because the requirement may crystallise for a prior tax year before you next review your filings.

The RNOR window is real and underused. If you are a returning NRI with material crypto gains sitting in a foreign exchange, selling during RNOR and keeping proceeds offshore costs you zero India tax. The US tax still applies if you hold a Green Card or citizenship, but you are paying one country's tax rather than two, at a rate lower than India's 30%. For someone abandoning the Green Card through a genuine immigration decision, the window is wider still.

The DTAA provides no reliable shelter for VDA gains. Do not structure around it without professional advice specific to this asset class and this transaction.

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Cross-references

• FBAR and FATCA for US Persons of Indian Origin
• LRS and Global Investing for NRIs
• Indian Mutual Funds and the PFIC Trap for US NRIs
• US Exit Tax and the Covered Expatriate Question
• US NRI Annual Filing Calendar
• Financial Transition When Returning to India
• RNOR Tax Planning for Returning NRIs
• India LTCG and STCG for NRIs
• DTAA India-US: Comprehensive Guide

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Disclaimers: Crypto and VDA tax rules are evolving rapidly in India and the United States. India's Section 115BBH is recent legislation subject to ongoing judicial interpretation and potential amendment. FBAR and Form 8938 reporting requirements for foreign crypto accounts are subject to pending final rulemaking by FinCEN and the IRS; the current position described in this article may change before or after your next tax filing. The India-US DTAA application to VDAs is unsettled, and no binding ruling exists as of the date of this article. Nothing in this guide constitutes tax advice. Consult a qualified Chartered Accountant (CA) in India and a Certified Public Accountant (CPA) in the US, both with demonstrated experience in crypto tax, before making any structuring decisions. Individual facts and circumstances will affect the outcome.