Let’s be honest—the words ‘crypto’ and ‘taxes’ in the same sentence can sound complicated. But it doesn’t have to be. Now that the Indian government has set clear rules, filing your crypto taxes is much easier than you’d expect.
This guide will give you a simple, step-by-step roadmap for the 2024-25 Financial Year (for income earned from April 2024 to March 2025). No confusion, just clear instructions.
First, Understand the Basic Rules
Before we start, let’s quickly recap the three most important crypto tax rules in India:
- A Flat 30% Tax: Any profit you make from selling, swapping, or spending your crypto is taxed at a flat rate of 30% (plus cess). It doesn’t matter what your income slab is.
- No Setting Off Losses: This is critical. You cannot offset your crypto losses against any crypto gains or any other income. For example, if you lost ₹10,000 on one crypto trade and gained ₹15,000 on another, you will be taxed on the entire ₹15,000 profit.
- 1% TDS: For every crypto transaction over ₹50,000 on an Indian exchange, a 1% Tax Deducted at Source (TDS) is applied. You can claim this TDS back when you file your returns.
Now that the basics are clear, let’s get your documents in order.
Also read: How to Secure Your Cryptocurrency: The Ultimate Checklist for Beginners
Step 1: Gather All Your Transaction Data
This is the most crucial step. You need a complete record of every single crypto transaction you made between April 1, 2024, and March 31, 2025.
- Download Transaction Reports: Log in to every Indian crypto exchange you use (like WazirX, CoinDCX, CoinSwitch) and download your annual transaction statement.
- Include Foreign Exchanges: If you use international platforms like Binance or KuCoin, you must get your trade history from them as well.
- Track Off-Platform Transactions: Did you sell crypto directly to a friend? Or use crypto to buy something? Make a note of these transactions.
Step 2: Calculate Your Total Gains and Losses
A taxable event occurs anytime you dispose of your crypto. This includes:
- Selling crypto for Indian Rupees (INR).
- Trading one crypto for another (e.g., selling Bitcoin to buy Ethereum).
- Using crypto to purchase goods or services.
To calculate your gain for each transaction, use this simple formula: Sale Price – Purchase Price = Profit/Gain
While you can do this manually on a spreadsheet, it can get very complicated. Using a trusted crypto tax calculator service (like KoinX or CoinTracker) is highly recommended. These platforms can connect to your exchange accounts and automatically generate a detailed tax report for you.
Step 3: Choose the Correct Income Tax Return (ITR) Form
Log in to the official Income Tax e-filing portal. Based on your overall financial profile, you will need to choose the right form:
- ITR-2: This form is for individuals who have income from sources other than a business or profession. If you are a salaried person who invests in crypto as a hobby, this is likely the form for you.
- ITR-3: This form is for individuals who have income from a business or profession. If you are a full-time, high-frequency crypto trader, you may need to file under this form.
For most casual investors, ITR-2 is the correct choice.
Step 4: Report Your Crypto Income in “Schedule VDA”
This is where you officially declare your crypto gains. “VDA” stands for Virtual Digital Asset. Inside the ITR form, find Schedule VDA.
You will need to fill in the following details for your crypto gains:
- Date of Acquisition: The date you bought the crypto.
- Date of Transfer: The date you sold or traded the crypto.
- Cost of Acquisition: The price at which you bought the crypto.
- Consideration Received: The price at which you sold the crypto.
The form will automatically calculate your profit based on these figures.
Step 5: Claim Your TDS Credit
The 1% TDS that was deducted on your transactions is not lost money. It’s essentially an advance tax paid on your behalf. You can find the total TDS deducted in your Form 26AS on the income tax portal.
Make sure to claim this amount while filing your ITR. It will be adjusted against your final tax liability.
Step 6: Pay Any Remaining Tax and E-Verify Your Return
After filling in all the details, the portal will calculate your total tax liability. If you owe any more tax after adjusting for TDS, pay it online.
The final step is to e-verify your return, which you can easily do using your Aadhaar OTP or through your bank account. And that’s it—you’re done!
A Final Word of Advice
It might be tempting to ignore your crypto gains, but doing so can lead to heavy penalties and legal notices from the Income Tax Department. By being transparent and organized, you can easily fulfill your tax obligations and invest with peace of mind.
Disclaimer: This article is for informational purposes only and should not be considered financial or tax advice. It is highly recommended to consult with a qualified Chartered Accountant (CA) for personalized advice.
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