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

Introduction: Navigating Crypto Taxes in India

With cryptocurrency adoption surging in India, understanding how to report crypto income has become crucial for investors. Since the 2022 Union Budget introduced specific tax rules for Virtual Digital Assets (VDAs), failure to comply can lead to penalties up to 100% of tax dues. This guide breaks down India’s crypto tax framework with actionable steps to ensure compliance.

Understanding India’s Crypto Tax Laws

India’s Income Tax Act treats cryptocurrencies as Virtual Digital Assets (VDAs) with these key provisions:

• 30% Flat Tax on all crypto gains regardless of holding period
• 1% TDS on transactions exceeding ₹10,000 per day (₹50,000 for specified persons)
• No Loss Offset – Crypto losses can’t offset other income
• No Deductions – Expenses (except acquisition cost) aren’t deductible

Types of Crypto Income and Tax Treatment

Capital Gains from Trading

All profits from selling crypto attract 30% tax + 4% cess. Calculate gains as: Selling Price – (Cost + Transfer Fees). Example: Buying ₹1 lakh Bitcoin and selling for ₹2 lakhs = ₹1 lakh taxable gain.

Staking and Mining Rewards

Rewards are taxed twice: First as ordinary income at receipt (FMV value), then as capital gains when sold. Maintain detailed records of reward dates and values.

Airdrops and Hard Forks

Taxable as Income from Other Sources at fair market value when received. Document wallet statements showing receipt dates.

Crypto as Salary/Payment

Taxed under Salary Income at slab rates. Employers must deduct TDS under Section 192.

Step-by-Step Reporting Process

1. Gather Records: Collect all transaction history from exchanges/wallets including dates, amounts, and counterparties
2. Calculate Gains: Use FIFO method to determine profits for each disposal
3. File ITR-2/ITR-3: Select based on income sources (ITR-3 for business income)
4. Disclose in Schedule VDA: Report all crypto holdings and transactions in the dedicated Virtual Digital Assets section
5. Pay Taxes Due: Clear outstanding liability by July 31st to avoid penalties

Critical Compliance Requirements

• TDS Compliance: Exchanges deduct 1% TDS – verify Form 26AS matches your records
• Foreign Exchange Reporting: Disclose overseas crypto holdings in Schedule FA
• Business Income Declaration: Frequent traders must register as businesses and maintain books

Common Reporting Mistakes to Avoid

• Omitting small transactions (all trades trigger tax events)
• Miscalculating cost basis (always use FIFO method)
• Forgetting TDS credits when filing returns
• Not reporting peer-to-peer transactions
• Ignoring airdrops/staking rewards

Essential Tools for Crypto Tax Filing

• Tax Calculators: KoinX, Cleartax Crypto
• Portfolio Trackers: CoinTracker, CoinGecko
• Government Portals: Income Tax e-Filing Portal (incometax.gov.in)
• Professional Help: Chartered Accountants with crypto expertise

FAQs: Crypto Tax Reporting in India

Q: Do I pay tax if I transfer crypto between my own wallets?
A: No tax applies for transfers between your wallets. Tax triggers only when disposing of assets.

Q: How are crypto gifts taxed?
A: Gifts exceeding ₹50,000 annually are taxable for recipients under ‘Income from Other Sources’.

Q: Can I carry forward crypto losses?
A: No. Losses from VDAs can’t be carried forward or offset against other income.

Q: Is TDS refundable if I have no taxable income?
A: Yes, claim refunds by filing returns if TDS exceeds your tax liability.

Q: What if I traded crypto before 2022 tax rules?
A: Pre-2022 transactions require disclosure but were taxed under capital gains at slab rates.

Conclusion: Staying Compliant

Accurate crypto income reporting in India demands meticulous record-keeping and understanding of VDA-specific rules. With the Income Tax Department increasing scrutiny through SFT reporting by exchanges, compliance is non-negotiable. Start organizing transactions early, use automated tools, and consult tax professionals to avoid penalties. Remember: Crypto anonymity doesn’t exempt you from tax obligations.