Crypto Tax Filing India: Comprehensive Step-by-Step Guide for FY 2024-25

There was a time in India's digital wild west when cryptocurrencies existed in a gray area. Miners, traders, and HODLers had to find their way through a landscape of soaring profits and alarming losses. They often questioned whether the government was watching over their digital assets.Then the Finance Act 2022 arrived, bringing with it the final verdict that ended the period of uncertainty. India had spoken, and the country's crypto tax laws were now well-established. All of a sudden, every Ethereum swap, every Bitcoin trade, and even those special NFTs had new meaning. A clear directive of a flat 30% tax on gains and a 1% TDS on transactions replaced the rumors of "tax-free crypto.”

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The question switched from "if" to "how"- how can one file crypto taxes in India without getting stuck in a maze of intricate computations and unusual paperwork? And here started the background story of contemporary cryptocurrency tax filing. With specific ITR forms, such as ITR-2 for capital gains and ITR-3 for business income, along with the most important Schedule VDA, it is no longer a difficult puzzle but rather a structured process. The government, which values transparency, even imposed trading platforms to report. Every cryptocurrency enthusiast must understand and comply with these new guidelines since the transition from decentralized ideals to tax-compliant reality has already begun.

Do I need to pay tax on crypto in India?

Yes, there is a tax on cryptocurrency in India. A flat 30% tax rate applies to profits made from the sale, exchange, or purchase of virtual digital assets (VDAs), such as Bitcoin, Ethereum, and NFTs. A 4% cess and any applicable surcharges increase this rate even higher.There is no provision for lower tax rates under Section 115BBH of the Indian tax even if it is a long term capital gain. The cost of acquiring the asset is the only expense that can be deducted; however transaction fees and other costs won't be deducted.

All VDA transfers, whether they are made by individuals or institutions, are subject to a 1% Tax Deducted at Source (TDS) u/s 194S in order to maintain compliance. The purpose of such TDS effective from July 1, 2022,is to increase transparency. Stricter reporting and compliance requirements under this rule have been reinforced in the Interim Budget 2025. The entities dealing with crypto will be required to report on cryptocurrency taxes starting from the fiscal year 2026-27. More tax compliance and transparency are the primary objectives of this step. The current crypto taxation regulations were not significantly altered by the Interim Budget 2025. The 1% TDS on transfers and the 30% tax on profit are still in place, with a focus on increased transparency through required reporting. This is in line with the G20's position, which favors a gradual regulatory framework for cryptocurrencies as opposed to a complete prohibition.

What are VDAs?

The digital assets that do not have physical existence are known as virtual digital assets, or VDAs. Consider them as a broad category that mainly consists of non-fungible tokens (NFTs), assets used in Decentralized Finance (DeFi), and cryptocurrencies (such as Bitcoin or Ethereum). In essence, the phrase refers to the categories of digital assets that are exempt from the new tax laws, namely digital gold, Central Bank Digital Currencies (CBDCs), and other conventional digital assets.

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Update on crypto tax from Budget 2025:

Significant changes to India's crypto tax laws were brought into effect by the Finance Act 2022, which affected the way virtual digital assets (VDAs) are taxed. The goal of these amendments, which will be taken into effect on April 1, 2026, is to provide a precise framework for India's cryptocurrency tax. The Income-tax Act 1961 has included a new Section i.e. Section 115BBH which imposes a 30% tax on VDA transfers. Importantly, other expenses cannot be deducted from crypto gains because this section only permits the acquisition cost to be deducted. Section 194S requires a 1% Tax Deduction at Source (TDS) on VDA transaction payments in order to improve compliance. In order to do this, organizations that facilitate VDA transactions will need to deduct taxes at the source.

Additionally, a new Section 285BAA imposes reporting requirements on organizations that handle cryptocurrency assets. The income-tax authority will need to receive comprehensive VDA transaction data from these entities, which will greatly accelerate the filing of cryptocurrency taxes. There are also provisions in place for correcting inaccurate statements and dealing with inaccuracies in these reports. To ensure that a greater variety of digital assets are covered by these new tax laws, the definition of VDAs has been expanded to include any crypto-asset that makes use of distributed ledger technology. Together, these changes mark a significant step towards regulating and taxing digital assets in India and offer a clearer framework for the country's cryptocurrency tax.

How much is crypto tax rate in India?

Crypto tax slab India:

• Buying Crypto: A 1% Tax Deducted at Source (TDS) applies, except for peer-to-peer (P2P) and international trades.
• Selling Crypto: Crypto gains are subject to a 30% tax.
• Surcharge & Cess: These are applied in addition to the 30% tax, based on your total income slab.
• Deductions: No deductions in respect of any expenditure or under Chapter VIA of the Income Tax Act are allowed.
• Crypto-to-Crypto Trades & Spending Crypto: Both are treated as sales, incurring a 30% tax on gains.
• Holding Crypto & Moving Crypto between Wallets: These activities are tax-free.
• Airdrops, Hard Forks, Mining Rewards, Staking Rewards: These are taxed at your applicable income tax slab rate upon receipt. If subsequently sold, a 30% tax applies to any gains.
• Gifts: Crypto gifts are taxable for the recipient however if it is received from a close family member or if the value is under Rs.50,000, then it won't be taxable.
• Donating Crypto: While donating, any gains made on the crypto are subject to a 30% tax. The donation itself is not tax-deductible.
• Losses: Losses from VDA transactions cannot be set off against any other income (even VDA gains) and cannot be carried forward to future years.
• Cost of Acquisition: This is the only allowed deduction when calculating gains from crypto transactions.

Which ITR Form to select for crypto income in India?

ITR-2: If your crypto gains are considered as capital gains which typically applies if you hold crypto as an investment, then you should file ITR-2.

ITR-3: This form is for individuals who report their crypto income as business income. This is generally relevant if you are actively trading crypto as a primary source of livelihood.

Regardless of the form chosen, a new Schedule VDA (Virtual Digital Assets) has been introduced for detailed reporting of crypto transactions, aligning with the crypto tax rules in India which is established by the Finance Act 2022. This schedule ensures comprehensive disclosure of your VDA activities to the tax authorities.

How to file crypto gains ITR India?

1. Prepare the Crypto Tax Reports: Get the required reports from your crypto tax system. These reports consist of the Complete Tax Report for income and expenses, the Capital Gains Report for disposals, and the Other Gains Report for derivatives.
2. Start ITR-2 by logging into the Income Tax Portal: Go to the Income Tax Portal (register if this is your first time). Select "e-file" > "Income Tax Returns" > "File Income Tax Returns." For FY 2024-25 choose Assessment Year 2025-26. Select "online" as the filing method and click "continue." Choose "start new filing," "individual" as the status, and "continue."* Select ITR-2 (for capital gains from crypto) under "I know which ITR Form I need to file." Enter your reason for filing after selecting "let's get started."
3. Report Capital Gains in Schedule VDA: Check the box next to Schedule VDA under "income" on the "select schedule" page. To enter each crypto trade,choose “add another" in Schedule VDA. Enter information from your Capital Gains Report for every transaction such as Acquisition Date, Sale Date, Head of Income (choose "capital gains" or "business income" depending on your activity), Acquisition Cost, Consideration received. Then Profit/loss will be automatically calculated by the portal. After every transaction has been added, verify the entries in Schedule VDA.
4. Report Other Crypto Income: Choose "schedule income from other sources" from the schedule summary screen. Select "add details" and "gross income chargeable to tax at normal applicable rates." Choose "any other income" and "add" under "nature of income." From your Complete Tax Report, enter "crypto income" as the type and total amount.
5. Complete Other Schedules and Verification: Complete any additional schedules that are necessary for your personal income and deductions. Go ahead and preview your ITR, then submit it after verification. To finish the crypto tax filing process, E-Verify your return using an OTP sent to your Aadhaar-linked mobile number. After that, any taxes owed, payment guidelines, and due dates will be communicated by the Income Tax Department.

Conclusion:

Every kind of cryptocurrency transaction, including mining, staking, referrals, and even receiving cryptocurrency as compensation, has tax implications, making it difficult to navigate India's crypto tax laws. Additionally, depending on your total income and individual deductions, choosing between the old and new tax regimes can drastically change your final tax liability. Platforms such as TaxSpanner provide a smooth crypto tax reporting experience, ensuring compliance. So, be at ease to file your cryptocurrency taxes in India by looking into TaxSpanner's plans.