How to File Taxes on Crypto in India: A Complete Guide

Don’t worry—this guide will walk you through everything step by step. From understanding the tax rules to calculating your gains, choosing the right ITR form, and even learning about penalties and exemptions—you’ll get all the details you need to file your crypto taxes without stress. Think of this as your go-to handbook for crypto taxation in India.

Why Filing Crypto Taxes Matters for You

The Indian government has classified cryptocurrencies and NFTs under a new category called Virtual Digital Assets (VDAs). In Budget 2022, Finance Minister Nirmala Sitharaman made it clear that all income from VDAs would be taxed. Ignoring these rules can lead to hefty penalties, scrutiny from the Income Tax Department, and even legal trouble.

By filing your crypto taxes correctly:

• You stay legally compliant and avoid penalties.
• You build credibility with banks, especially if you want loans or credit cards in the future.
• You protect your investments from future disputes.
• You can plan smarter for your finances by understanding how much tax you’ll owe.

Understanding Crypto Tax Rules in India

Understanding crypto tax calculations step by step

Before we dive into the “how,” let’s break down the “what.” Here are the key tax rules you must know:

• Flat 30% Tax on Profits: Any profit you make from selling or trading crypto is taxed at 30%—no matter what your regular income tax slab is.
• 1% TDS (Tax Deducted at Source): For every crypto transaction above a certain threshold, exchanges deduct 1% TDS. This is not an extra tax but an advance payment you can claim while filing ITR.
• No Set-Off for Losses: Losses from one crypto cannot be adjusted against gains from another. You also cannot carry forward crypto losses to future years.
• Tax on Crypto Income: If you earn crypto through mining, staking, freelancing, or as salary, it will be taxed as per your regular income slab.

Step-by-Step Guide: How to File Taxes on Crypto in India

Step 1: Collect All Your Crypto Records

The very first step is gathering accurate transaction data. You’ll need to collect records from every crypto exchange and wallet you use, whether Indian or international. Keep a log of:

• Buy and sell transactions with dates, prices, and quantities.
• Exchange fees and charges.
• Transfers between wallets (even though not taxable, they’re good to record).
• Income from mining, staking, lending, or airdrops.

Many exchanges like WazirX, CoinDCX, or Binance provide transaction histories you can download in CSV format. Keep them organized year-wise for easy access.

Step 2: Calculate Your Gains or Losses

To calculate taxable gains:

Gains = Selling Price – Purchase Price – Transaction Costs

For example, if you bought Bitcoin worth ₹1,00,000 and sold it for ₹1,50,000 after paying ₹1,000 as fees, your taxable gain is:

₹1,50,000 – ₹1,00,000 – ₹1,000 = ₹49,000

This ₹49,000 will be taxed at 30% = ₹14,700 (plus surcharge and cess).

⚠️ Remember: Losses cannot be deducted from other income. So if you lost money in one trade, it doesn’t reduce the tax liability of your profitable trade.

Step 3: Understand the Applicable Tax Rates

Here’s a quick breakdown of how different types of crypto incomes are taxed in India:

• Trading or Selling Crypto: Flat 30% tax on profits.
• 1% TDS: Deducted automatically on each trade by exchanges.
• Crypto Earned via Salary: Taxed as per your income slab rates.
• Mining or Staking Rewards: Treated as income from other sources and taxed at slab rates.

Step 4: Report Under the Correct ITR Form

Depending on your source of crypto income, you must choose the correct ITR form:

• ITR-2: For individuals reporting capital gains from occasional trading.
• ITR-3: For business income if you are a frequent crypto trader.
• ITR-4: For presumptive taxation if you declare crypto as part of business income under special provisions.

Step 5: File Through the Income Tax Portal

Use the Income Tax Portal to file your crypto taxes

Here’s how you can actually file your return:

1. Visit the Income Tax Portal and log in with your PAN-based credentials.
2. Select the correct ITR form (2, 3, or 4).
3. Disclose your crypto income under “Income from Other Sources” or “Capital Gains.”
4. Verify TDS deductions already made by exchanges (they appear in Form 26AS).
5. Pay any balance tax due.
6. Submit and e-verify your return.

Examples of Filing Crypto Taxes

Example 1: Occasional Trader

An IT professional buys Bitcoin for ₹2,00,000 and sells for ₹3,00,000. After deducting ₹1,000 in fees, the gain is ₹99,000. Tax = 30% of ₹99,000 = ₹29,700.

Example 2: Frequent Trader

A person trades daily on Binance and makes ₹5 lakh profits. Since this is regular activity, it may be reported under “Business Income.” Apart from 30% tax, they may also claim some expenses like electricity or internet if used for trading.

Example 3: Freelancer Paid in Crypto

A freelancer receives $1000 in USDT for a project. At ₹85/$, this is ₹85,000. It will be taxed as professional income under their slab rate. Later, if they sell USDT, any gain will again be taxed at 30%.

Practical Tips for Filing Crypto Taxes

• Download your transaction history regularly to avoid last-minute chaos.
• Use crypto tax software like Koinly or CoinTracker to auto-calculate gains.
• Maintain separate records for Indian and foreign exchanges.
• Consult a CA for large or complex portfolios.

Penalties for Not Filing Crypto Taxes

If you skip reporting your crypto income, you risk:

• Penalty ranging from 50% to 200% of tax evaded.
• Interest on unpaid taxes.
• Scrutiny and notices from the Income Tax Department.
• In extreme cases, legal action.

It’s better to file honestly than face these consequences later.

How Crypto Taxes Impact Your Investments

Taxation changes how you approach crypto investing. Many investors shift to long-term holding since frequent trades attract repeated taxation. Others diversify into assets like mutual funds or gold for balance. Knowing the rules helps you plan smarter and avoid nasty surprises during tax season.

Tools for Filing Crypto Taxes in India

Here are some tools that can help simplify the process:

• Koinly: Auto-syncs transactions from multiple exchanges.
• ClearTax: Has a crypto-specific calculator for Indian investors.
• CoinTracker: Great for international exchange users.
• WazirX Reports: Provides tax-ready statements.

FAQs: How to File Taxes on Crypto in India

1. Do I need to pay tax if I just hold crypto and don’t sell?

No, tax is applicable only when you sell, trade, or earn from crypto. Simply holding does not attract tax.

2. Can I offset crypto losses against stock market gains?

No, crypto losses cannot be set off against income from other heads like stocks or real estate.

3. What if I trade on foreign exchanges?

Even if you trade on Binance, Coinbase, or any foreign exchange, you are still liable to report and pay taxes in India.

4. Which ITR form should I use for crypto income?

Most individuals use ITR-2 or ITR-3, depending on the source of crypto income.

5. Is TDS applicable even on small trades?

TDS applies when annual transactions cross ₹10,000 (₹50,000 for specified individuals). Exchanges deduct it automatically.

6. Do I need to pay GST on crypto?

If you are a business dealing in crypto, GST may apply. For regular investors, GST is not applicable.

7. Are NFTs also taxed?

Yes, NFTs are also considered Virtual Digital Assets and taxed at the same 30% rate.

✅ Internal Links

Understanding Crypto Tax Rules in India

Best Tools for Managing Crypto Portfolio

Conclusion

Filing taxes on crypto in India doesn’t have to be overwhelming. By keeping detailed records, calculating gains carefully, and using the correct ITR forms, you can stay compliant and protect your wealth. Remember, how to file taxes on crypto in India is not just about paying 30%—it’s about smart planning, avoiding penalties, and ensuring your crypto journey remains sustainable. Treat crypto taxes as part of your investment strategy, and you’ll navigate the financial future with confidence.