Crypto tax filing guide for Indians (FY 2025-26 returns)

Crypto tax in India is uniquely brutal: 30% flat regardless of income, 1% TDS on every sell, no loss set-off, and no deductions. If you traded crypto in FY 2025-26, here's how to file correctly and avoid the inevitable Income Tax notice.

The rules in 60 seconds

• Section 115BBH: All Virtual Digital Asset (VDA) gains taxed at 30% flat + 4% cess = effective 31.2%
• Section 194S: 1% TDS on every transfer/sell over ₹10K (₹50K for specified persons)
• No loss set-off: Crypto losses can't reduce other income (salary, business, capital gains). Can't carry forward either.
• No deductions: Only cost of acquisition is allowed. Not even commission/brokerage paid to exchanges.
• Per-transaction taxation: Each sell is individually taxed. You can't net wins against losses across coins.

Filing process for FY 2025-26

Step 1: Gather your transaction history

Download the full tax report from EVERY exchange you used (CoinDCX, WazirX, ZebPay, Binance, Coinbase, etc.). Most have a "Tax Report" or "Profit & Loss" CSV download feature.

Required fields: date of transfer, type (buy/sell/swap/airdrop), coin name, quantity, INR value, exchange fee.

Step 2: Compute gain per transaction

For each sell:

Gain = (Sell value × Sell qty) − (Buy value × Buy qty for same coin, FIFO basis)

Most exchanges use FIFO (First-In-First-Out) for matching buys to sells. You can choose, but be consistent.

For our crypto tax calculator, just enter total buy value, sell value, and qty for each coin — it gives you per-transaction tax.

Step 3: File Schedule VDA in your ITR

From AY 2023-24 onwards, ITR forms have a separate Schedule VDA. Required entries:

• Date of acquisition
• Date of transfer
• Cost of acquisition
• Consideration received
• Income from transfer (computed per transaction)

Tedious if you have hundreds of transactions. Use Koinly, ClearTax Crypto, or Quicko for auto-import from exchanges.

Step 4: Claim TDS credit

The 1% TDS deducted by exchanges shows up in your Form 26AS and AIS. Verify total TDS matches what's reported. Claim it as advance tax credit when filing — it'll reduce your final 30% liability.

Step 5: Pay balance tax

Total tax = (Gains × 30% × 1.04) − TDS already deducted. Pay shortfall as self-assessment tax before filing.

Common pitfalls

1. Treating multiple exchanges separately

Wrong. The IT Department has full visibility via TDS aggregated in your PAN. Combine all exchanges into one report.

2. Forgetting airdrops & staking

Both taxable at 30% on FMV at receipt. Then taxed again at 30% if/when you sell at a profit. Yes, double taxation. Keep records.

3. Crypto-to-crypto swaps

Swapping BTC for ETH = sell BTC + buy ETH. Both legs are taxable events. Even if you didn't withdraw INR, IT considers it a transfer.

4. Self-transfers between wallets

Not taxable — moving your own BTC from CoinDCX to a hardware wallet doesn't trigger tax. But TDS may still be deducted by exchange — claim it as refund.

5. NFT tax

NFTs are VDAs. Same 30% rule. Buying an NFT and reselling at profit = 30% tax. Holding NFT collections has no tax impact until sale.

Penalties for non-compliance

• Late filing: ₹5,000 (income > ₹5L) or ₹1,000 (below ₹5L)
• Underreporting: 50% of tax not paid
• Misreporting: 200% of tax
• Non-filing despite TDS visibility: notice + penalty + prosecution risk

The future

Industry has lobbied for reduced rate (20%) and loss carry-forward. Budget 2026 didn't address it. Expect status quo for FY 2026-27. Plan accordingly.

FAQs

Do I need to file ITR if I only had losses?

Yes, if you traded any crypto. Schedule VDA is required disclosure regardless of profit/loss.

Can I show crypto income as business income?

Some traders argue this for unlimited expense deduction. IT Dept hasn't accepted it for retail traders. Stick to Schedule VDA (115BBH treatment) to avoid notices.

What if I traded P2P?

P2P transfers also taxable. TDS applies if buyer is non-individual. P2P is heavily monitored — IT has been issuing notices to P2P traders.

Is gifted crypto taxable?

Yes — recipient pays 30% on FMV at receipt. Gifts above ₹50K from non-relatives are taxable.