How to Report Crypto Income in India: Your 2024 Tax Guide

With India’s cryptocurrency adoption skyrocketing, understanding how to report crypto income has become crucial for investors. The Income Tax Department now mandates strict disclosure of all virtual digital asset (VDA) transactions. This comprehensive guide breaks down India’s crypto tax framework into actionable steps, helping you avoid penalties while maximizing compliance.

Understanding India’s Crypto Tax Rules

Since April 2022, all cryptocurrency transactions fall under the Virtual Digital Assets (VDA) tax regime. Key regulations include:

• 30% flat tax on all crypto profits (sale, trading, mining rewards)
• 1% TDS on every transaction exceeding ₹10,000
• No loss offset – Crypto losses can’t reduce other income
• Gifting tax – Receiving crypto as gift incurs income tax at receiver’s slab rate

These rules apply to exchanges, P2P transfers, and decentralized platforms alike.

Types of Crypto Income and Tax Treatment

Taxable Events in India

• Trading Profits: 30% tax on gains when selling crypto for INR or swapping between coins
• Staking Rewards: Treated as income at market value when received
• Airdrops & Forks: Taxable as ‘other income’ upon receipt
• Mining Income: Valued at fair market price when mined
• NFT Sales: Subject to 30% capital gains tax

Non-Taxable Events

• Buying crypto with INR
• Holding crypto (no wealth tax)
• Transferring between your own wallets

Step-by-Step Guide to Reporting Crypto Income

Step 1: Calculate Your Taxable Income

Gather transaction history from all exchanges and wallets. Calculate:

1. Total sale proceeds from crypto disposals
2. Cost of acquisition (including transaction fees)
3. Net gain = Sale proceeds – Cost basis

Use FIFO (First-In-First-Out) method for cost calculation as mandated by Indian tax laws.

Step 2: File ITR-2 Form

Crypto income must be reported in Schedule VDA of ITR-2. Key fields:

• Description of VDA
• Date of acquisition & transfer
• Sale consideration
• Cost of acquisition
• Deductions (if any)
• Taxable income

Step 3: Pay Advance Tax

If your crypto tax liability exceeds ₹10,000, pay in installments:

1. 15% by June 15
2. 45% by September 15
3. 75% by December 15
4. 100% by March 15

Late payments incur 1% monthly interest.

Step 4: Claim TDS Credits

Verify TDS deducted by exchanges on Form 26AS. Claim credit when filing returns by providing:

• TDS certificate (Form 16A)
• Exchange transaction IDs
• Bank statements showing TDS deductions

Essential Documents for Crypto Tax Filing

• CSV transaction reports from all exchanges
• Wallet addresses with transaction histories
• Bank statements showing crypto-related deposits/withdrawals
• TDS certificates (Form 16A)
• Proof of cost acquisition for mined/airdropped coins
• Records of cross-chain transfers

Common Crypto Tax Mistakes to Avoid

• Ignoring small transactions – All trades trigger TDS above ₹10,000 threshold
• Miscalculating holding period – No long-term benefits; all gains taxed equally
• Omitting DeFi transactions – Liquidity pools and yield farming are taxable
• Forgetting gift taxes – Receiving ₹50,000+ in crypto from non-relatives is taxable
• Missing TDS credits – Verify deductions through TRACES portal

Crypto Tax FAQ: India Edition

Do I need to report crypto if I only have losses?

Yes. While losses can’t offset other income, you must still disclose all transactions in Schedule VDA to avoid penalties.

How is crypto taxed if I transfer between wallets?

Wallet transfers aren’t taxable events, but you must maintain records showing same ownership. Exchanges between different cryptocurrencies are taxable.

Are foreign exchange transactions reportable?

Absolutely. The 30% tax and 1% TDS apply regardless of where the exchange is based if you’re an Indian tax resident.

What if I forgot to file crypto taxes last year?

File a revised return (ITR-U) within 24 months. Penalties range from 50%-200% of tax due plus interest at 1% monthly.

Can I deduct crypto trading fees?

Yes. Transaction fees (gas fees, exchange commissions) are deductible from sale proceeds when calculating gains.

Staying compliant with India’s crypto tax laws requires meticulous record-keeping and understanding of VDA regulations. Consult a chartered accountant specializing in cryptocurrency for complex cases, and always maintain transaction histories for 6 years as per income tax retention rules.