₹ vs $: The Real Loss Indian Bitcoin Buyers Face After 33% Crash: Does Crypto Tax Rule Offer Any Relief

An Indian crypto investor who bought one Bitcoin at last October's record high is sitting on a paper loss of about Rs. 31 lakh, or 28%, and can claim no tax benefit on the loss if they sell

But there is an interesting twist: the loss looks quite smaller in rupee terms than it does in dollars.

Bitcoin is trading near $84,355 on Thursday, about 33% below the all-time high of $126,210.50 it touched on October 6, 2025. For an Indian investor, however, the weaker rupee has cushioned part of that decline.

When Bitcoin hit its peak, the rupee was trading at around Rs. 88.70 to the dollar, so the value of one Bitcoin was roughly at Rs. 1.12 crore.

At Today's exchange rate of around Rs. 95.84 to the dollar, the same Bitcoin is worth about Rs. 80.6 lakh.

"For Indian Bitcoin investors, a correction has to be viewed through the lens of rupee-denominated returns. BTC/INR is influenced by both the global Bitcoin price and the USD/INR exchange rate, meaning the domestic value of a holding reflects both crypto-market volatility and currency movements. A decline in BTC/USD can be partly offset in INR terms when the rupee weakens against the dollar, while a stable dollar price can still translate into a rupee gain or loss as the currency moves," said Balaji Srihari, VP, Business, India, CoinSwitch.

Rupee Gives Bitcoin Investors a Cushion

The gap between the two losses, about 5 percentage points, is mainly a currency effect. The rupee has weakened by roughly 7% against the dollar since Bitcoin's October peak. That means every dollar of Bitcoin value converts into more rupees than it did at the top.

The rupee fell 11 paise to 95.84 in early trade on Thursday after a rise in crude oil prices, with Brent up 0.30% at $103.3 a barrel at the time of writing. A stronger rupee would narrow the gap. If it returned to Rs. 88.7, the loss in rupee terms would equal the dollar loss.

"The relevant assessment therefore starts with the investor's rupee entry price and the rupee value at exit. Exchange-specific premiums, spreads, transaction costs, and applicable VDA tax and TDS implications can further affect the realised outcome." Srihari further added.

Bitcoin's Current Performance

Even though the token is trading in the negative zone today, Bitcoin's performance over the last few days has been positive. It is up 10% from $75,164 a week ago and has gained roughly 6% over the past month. However, the bitcoin price is down 25% over the past year and 3.94% so far in 2026.

"Bitcoin slipped toward $84,000 after stronger-than-expected US business activity pushed the 10-year Treasury yield to its highest since 2007 and lifted October rate-hike expectations to around 70%," said Prateek Gupta, Head of Business, Mudrex.

What happens when an Indian investor sells at a loss?

For Indian crypto investors, Bitcoin's price decline is only one part of the problem. The bigger problem for Indian crypto investors is the tax rule. As per the government rule, income from virtual digital assets is taxed at a flat 30%.

But if you lose money, you cannot use that loss to reduce your tax bill. A 1% TDS also applies once the applicable thresholds are crossed. Including the 4% cess, the effective tax rate on taxable VDA income is 31.2%.

Suppose you invest Rs. 20 lakh in Bitcoin and later sell it for Rs. 30 lakh. You have made a Rs. 10 lakh profit. At an effective tax rate of 31.2%, including cess, the tax on that gain could be around Rs. 3.12 lakh. So, after tax, the investor is left with around Rs. 6.88 lakh in profit.

Now consider another investor who also puts Rs. 20 lakh into Bitcoin, but the value falls, and they eventually sell it for Rs. 10 lakh. They have suffered a Rs. 10 lakh loss.

They don't have to pay tax on the loss, nor can they use that loss to reduce tax on their salary, other crypto gains, or future crypto profits. In other words, a crypto loss gives the investor no tax relief.

Where is Crypto Headed Next: The Outlook Ahead

After the recent slump, investors are now looking forward to whether bitcoin will make a recovery or not.

Well, there are some positive signs as US spot Bitcoin ETFs attracted $1.7 billion in just two days this week, which means investors are still putting money into Bitcoin. On-chain signals are also improving," said Prateek Gupta, Head of Business, Mudrex.

"However, with $16 billion worth of Bitcoin options expiring on Friday, the market could remain volatile in the near term. For now, resistance is at $86,500, while support is at $82,500," he added

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