Don’t miss crypto income tax filing rules

July 3, 2025 Finance Talk Valli Sarvani

With more Indians exploring cryptocurrencies, tax compliance has become more important than ever.

As the ITR season for FY2025-26 is ongoing, investors must correctly report income from digital assets like crypto and NFTs to avoid penalties.

The Union Budget 2022 officially classified cryptocurrencies as Virtual Digital Assets. Any profit from their sale is taxed at a flat 30%, plus a 4% health and education cess.

On top of that, a 1% TDS is deducted at the time of sale by exchanges. This brings the effective tax burden to nearly 35% on profits.

How to File Crypto Taxes in India:

Pick the Right ITR Form

You cannot use ITR-1 if you have crypto income.

Use any of the following forms as per your need:

ITR-2 for capital gains (occasional selling)
ITR-3 if trading frequently or as a business
ITR-4 if under presumptive taxation

Identify the Income Type

Capital Gains if you invest and sell occasionally
Business Income for full-time or frequent traders
Other Sources for income from airdrops, staking, etc.

Calculate the Income

For this, you need to list each transaction
Date, buy/sell price, and exchange used
Subtract the purchase cost from the selling price to get the profit
No other deductions are allowed except the cost of acquisition

Fill Schedule VDA

Enter transaction-wise or consolidated details, like Asset type, purchase/sale dates, amounts, and TDS if applicable

Declare Foreign Crypto Use

If you used platforms like Binance, fill Schedule FA with:

Exchange name, country, wallet ID, peak and closing balance

Match TDS Details

Cross-check TDS in Schedule TDS using Form 26AS or certificates from exchanges

File a Revised Return if Missed Earlier

Use Section 139(8A) to revise your return before the deadline

Keep Documents Ready

Maintain full transaction history, wallet addresses, exchange statements, and TDS records.

Non-disclosure can lead to penalties under Section 69A. Crypto investors must take tax filing seriously. Transparency and timely reporting ensure peace of mind and compliance.

Image by Abhijit Dutta from Pixahive (Free for commercial use / CC0 Public Domain)

Image Published on October 14, 2020