How to Show Crypto in ITR: The Basics
To show crypto in your ITR, you must report gains in Schedule VDA (Virtual Digital Assets) and pay tax at 30% plus any applicable surcharge and cess. This applies whether you are an investor or a trader. The Income Tax Department introduced Schedule VDA in the ITR forms for Assessment Year 2023-24 and later. Always check the current year’s forms and consult a chartered accountant (CA) for your specific situation.
Since April 1, 2022, India taxes income from transferring virtual digital assets at a flat 30%, with no deduction for expenses other than the cost of acquisition. Losses from crypto cannot be set off against other income or carried forward. A 1% TDS also applies to crypto sales above certain thresholds. These rules make accurate reporting essential.
From April 1, 2026, the Income-tax Act, 1961 was replaced by the Income-tax Act, 2025. Returns for income earned up to March 31, 2026 still use the familiar forms; income from April 2026 onward will be reported under the new Act, whose forms and section numbers differ, though the core VDA rules are the same.
Which ITR Form Should You Use for Crypto?
The correct ITR form depends on how you treat your crypto activities. The Income Tax Department’s instructions for the current year specify the forms. Here is a general guide:
- Investor: If you buy, hold, and occasionally sell crypto as an investment, use ITR-2. This form is for individuals and HUFs with capital gains and no business income.
- Trader: If you trade frequently, treat crypto as business income, and use ITR-3. This form is for individuals and HUFs with income from business or profession.
If you have other business income, ITR-3 may apply even if crypto is not your main activity. When in doubt, consult a CA. The key is to be consistent: do not switch between investment and business treatment without reason.
Step-by-Step: Reporting Crypto in Schedule VDA
Schedule VDA requires you to report each transfer of a virtual digital asset. You need details such as date of acquisition, date of transfer, cost of acquisition, consideration received, and TDS deducted. Here is how to proceed:
- Gather records: Collect exchange profit and loss statements, trade confirmations, and TDS certificates (Form 16A) for the financial year.
- Calculate gains: For each sale, compute gain as sale consideration minus cost of acquisition. Cost of acquisition is the price you paid for the crypto; brokerage and exchange fees cannot be added to it.
- Fill Schedule VDA: In your ITR, go to Schedule VDA and enter each transaction. The schedule asks for details transfer by transfer, so if you have many trades, keep detailed records and ask a CA how best to enter them.
- Report TDS: Claim TDS credit in Schedule TDS. Ensure the TDS certificate matches the amount in Form 26AS.
- Pay tax: Tax at 30% plus any surcharge and cess on the total gains. Advance tax may apply if your total tax liability exceeds ₹10,000 in a year.
Remember that no deduction is allowed for expenses other than cost of acquisition. So, you cannot deduct trading fees, internet costs, or mining expenses from crypto gains.
To estimate the tax before you fill in Schedule VDA, use our India crypto tax calculator.
Records You Need to Keep
Good record-keeping simplifies reporting and helps during scrutiny. Maintain the following:
- Exchange P&L statements: Download annual profit and loss reports from each exchange you use.
- TDS certificates: Form 16A from exchanges that deducted TDS on your sales.
- Transaction logs: Date, asset, quantity, price, and fees for each buy and sell.
- Bank statements: To show money moving between your bank and exchanges.
- Wallet records: If you use self-custody wallets, keep notes of transfers and valuations.
Keep these records for at least six years from the end of the relevant assessment year. That is the period for which businesses must keep their books, and older returns can be reopened in some cases.
Common Mistakes to Avoid
Many taxpayers make errors when reporting crypto. Watch out for these:
- Not reporting crypto at all: The tax department can track transactions through exchanges and TDS. Non-reporting invites penalties.
- Using the wrong ITR form: Using ITR-1 when you have crypto gains is incorrect because ITR-1 does not have Schedule VDA. Use ITR-2 or ITR-3.
- Claiming expenses: Only the cost of acquisition is deductible. Do not deduct trading fees or other costs.
- Setting off losses: Crypto losses cannot be set off against gains from other assets, or even other crypto, and cannot be carried forward.
- Ignoring TDS: Claim TDS credit only if it appears in Form 26AS. Otherwise, you may face a mismatch.
- Not checking current-year rules: Tax laws change. Verify the latest ITR forms and instructions each year.
If you are unsure, consult a CA. A professional can help you avoid mistakes and file correctly.
Frequently Asked Questions
Can I use ITR-1 to report crypto gains?
No, ITR-1 does not have Schedule VDA. You must use ITR-2 or ITR-3 depending on whether you treat crypto as investment or business income.
Is crypto taxed at 30% even if I hold for long term?
Yes, gains from virtual digital assets are taxed at a flat 30% regardless of holding period. No indexation or long-term benefit applies.
Can I set off crypto losses against stock market gains?
No, losses from crypto cannot be set off against any other income, including stock market gains. They also cannot be carried forward.
What if I have crypto gains below the taxable limit?
You still need to report them in Schedule VDA. Crypto gains are taxed at the flat 30% rate even if your total income is below the basic exemption limit, and the Section 87A rebate generally cannot be used against this tax. Check current rules with a CA, and see our crypto tax in India guide.
Final Checklist
- Collect all exchange P&L statements and TDS certificates.
- Compute gains for each transfer.
- Choose the correct ITR form (ITR-2 or ITR-3).
- Fill Schedule VDA accurately.
- Claim TDS credit in Schedule TDS.
- Pay tax and file before the due date.
- Consult a CA if you have complex transactions.
Always refer to the Income Tax Department’s website for the latest forms and instructions. This guide is for information only and is not tax advice.