How to File Crypto Tax in India in 2025: The Ultimate Guide

Cryptocurrencies like Bitcoin, Ethereum, and Solana have revolutionized digital investing in India. With this transformation, the Indian government has stepped in to ensure digital assets are taxed properly. Since 2022, the Income Tax Department has introduced a dedicated framework for taxing digital currencies, making it essential for investors to understand how to report their crypto-related income.

If you’ve traded, earned, or held cryptocurrencies, you must know how to file your crypto taxes in India. This guide will help you understand the crypto tax system, how to calculate your liability, and the step-by-step process for accurate filing in FY 2024–25.

Table of Contents

1. Introduction to Crypto Taxation in India

2. What Are Virtual Digital Assets (VDAs)?

3. Latest Tax Rules for Cryptocurrencies in India

4. Income Tax on Crypto Gains

5. Understanding the 1% TDS Rule

6. Tax on Different Types of Crypto Income

7. Keeping Records of Your Crypto Transactions

8. How to File Crypto Taxes Step-by-Step

9. Sample Tax Calculation for Crypto Gains

10. Tools and Platforms to Simplify Crypto Tax Filing

11. Mistakes to Avoid While Filing

12. Legal Consequences of Non-Compliance

13. The Future of Crypto Taxation in India

14. Expert Tips to Save on Crypto Tax Legally

15. Commonly Asked Questions

16. Final Thoughts

1. Introduction to Crypto Taxation in India

The Indian cryptocurrency market has witnessed exponential growth over the past few years. Millions of investors are trading digital assets daily, making it crucial for the government to regulate the industry. In response, the Finance Act 2022 introduced a new tax regime for crypto earnings, which continues in FY 2024–25.

If you’re holding or trading in cryptocurrencies, filing your taxes isn’t optional—it’s a legal obligation. The government now treats digital assets as taxable instruments, requiring proper disclosures during your Income Tax Return (ITR) filing.

2. What Are Virtual Digital Assets (VDAs)?

According to Indian law, Virtual Digital Assets (VDAs) include cryptocurrencies, NFTs, and any other digital assets notified by the government. This classification was introduced to ensure clarity in taxation.

Examples of VDAs:

• Bitcoin (BTC)

• Ethereum (ETH)

• Dogecoin (DOGE)

• Solana (SOL)

• Non-Fungible Tokens (NFTs)

These digital assets are now treated as capital assets or business assets, depending on how the individual uses them.

3. Latest Tax Rules for Cryptocurrencies in India

The government’s approach to crypto taxation is straightforward but strict. Two key sections govern the tax implications for cryptocurrencies:

a. Section 115BBH – Income Tax on Crypto Transfers

This section imposes a flat 30% tax on any profits earned from transferring digital assets. No deductions are allowed, except for the cost of acquisition.

b. Section 194S – TDS on Crypto Transactions

A 1% TDS (Tax Deducted at Source) is applicable on crypto transactions exceeding a specified threshold. The TDS must be deducted by the buyer or the exchange at the time of payment.

These rules make it mandatory for individuals and institutions dealing with cryptocurrencies to report income and maintain detailed records.

4. Income Tax on Crypto Gains

Whenever you sell, swap, or transfer your crypto holdings, the resulting profit is taxable at 30%. This is regardless of your income tax slab.

Important Notes:

• You cannot offset your crypto losses against any other income.

• You cannot claim deductions for transaction fees or exchange charges.

• No carry forward of losses is allowed into the next year.

Taxable Amount:

Profit = Selling Price - Purchase Price

Let’s say you bought Ethereum worth Rs. 1,00,000 and sold it for Rs. 1,40,000.

• Capital Gain = Rs. 40,000

• Tax = 30% of Rs. 40,000 = Rs. 12,000

5. Understanding the 1% TDS Rule

The 1% TDS is a major change in the way crypto transactions are taxed in India. It applies to:

• Crypto-to-INR transactions (selling for fiat)

• Crypto-to-Crypto exchanges (BTC to ETH)

• NFT sales

• Payments made using cryptocurrency

TDS Threshold:

• Rs. 10,000 annually for regular users

• Rs. 50,000 annually for specified persons (salaried individuals, HUFs)

Who Deducts TDS?

• Centralized exchanges typically deduct TDS and deposit it with the government.

• In peer-to-peer (P2P) or decentralized (DEX) trades, the buyer must deduct TDS and file a TDS return.

TDS deducted is reflected in Form 26AS, and you can claim this amount while filing your tax return.

6. Tax on Different Types of Crypto Income

Crypto activities beyond buying and selling also attract tax. Here’s how they are treated:

a. Crypto Mining

• Income from mining is taxed under “Income from Other Sources.”

• You must declare the value of the mined tokens in INR on the date you receive them.

b. Airdrops

• Airdropped tokens are taxed as income when received.

• The fair market value becomes the cost of acquisition when sold.

c. Staking and Yield Farming

• Rewards are taxable at the time of receipt.

• Taxed under “Income from Other Sources” or business income, depending on scale.

d. Gifting Crypto

• Gifts above Rs. 50,000 are taxable unless received from relatives or under specific occasions.

7. Keeping Records of Your Crypto Transactions

The onus of maintaining transaction records falls on the taxpayer. It’s essential to maintain:

• Transaction dates

• Quantity and type of crypto

• Purchase and sale price in INR

• TDS deducted (if any)

• Wallet addresses involved

• Screenshots or transaction receipts

Good record-keeping simplifies tax filing and protects you in case of audits.

8. How to File Crypto Taxes Step-by-Step

Filing crypto taxes is easier when done systematically. Here’s a detailed step-by-step process:

Step 1: Identify Your Crypto Transactions

Categorize your activities:

• Trading

• Staking

• Airdrops

• NFT sales

• Mining

Step 2: Calculate Profits and Losses

For each transaction:

• Find the INR value on the transaction date

• Subtract purchase cost from sale price

• Calculate gains per asset

Step 3: Review TDS Deductions

Check your Form 26AS or AIS for TDS deducted. Ensure all deducted TDS is accounted for.

Step 4: Determine the Right ITR Form

• ITR-2: Salaried individuals with capital gains

• ITR-3: If you’re trading crypto as a business

• ITR-4: Presumptive income (not typically used for crypto)

Step 5: Enter the Crypto Income

Declare your crypto gains under the “Income from Other Sources” or “Capital Gains” section, based on your usage pattern.

Step 6: Pay Any Remaining Tax

If TDS isn’t enough to cover your total liability, pay the remaining tax using the challan system.

Step 7: File Before Due Date

Make sure to file your return by July 31, 2025 (for FY 2024–25).

9. Sample Tax Calculation for Crypto Earnings

Scenario:

• Purchased 1 BTC for Rs. 25,00,000

• Sold it for Rs. 33,00,000

• Exchange deducted Rs. 33,000 as TDS

Calculation:

• Profit = Rs. 8,00,000

• Tax @ 30% = Rs. 2,40,000

• TDS credit = Rs. 33,000

• Net Tax Payable = Rs. 2,07,000

This amount must be paid before filing your ITR.

10. Tools and Platforms to Simplify Crypto Tax Filing

Several platforms can make your job easier by syncing your exchange data and calculating tax automatically:

Best Crypto Tax Tools in India:

• KoinX: Designed specifically for Indian tax rules

• ClearTax Crypto: Offers automated reports and filing

• Binocs: Syncs with Indian exchanges and wallets

• CoinTracker: Ideal for international users with Indian tax support

These tools help generate tax reports compatible with ITR forms.

11. Mistakes to Avoid While Filing Crypto Taxes

Avoid these common errors to stay compliant:

• Ignoring TDS deduction in P2P trades

• Reporting net instead of gross income

• Failing to declare NFT transactions

• Misreporting airdrop or staking rewards

• Using the wrong ITR form

It’s advisable to consult a tax expert if you’re unsure about any part of your crypto earnings.

12. Legal Consequences of Non-Compliance

Failure to report crypto transactions can lead to:

• Penalties under Section 270A (50% of underreported income)

• Interest on unpaid taxes under Sections 234A/B/C

• Prosecution under Section 276C for intentional evasion

Hence, timely and accurate filing is crucial to avoid legal trouble.

13. The Future of Crypto Taxation in India

The Indian government is still refining its approach to digital assets. Expected developments include:

• Differentiated tax slabs for long-term holdings

• Regulatory guidelines for exchanges and wallets

• Global crypto tax reporting through G20 agreements

• Possible GST implementation on crypto trading

Investors should stay updated with CBDT and RBI notifications to remain compliant.

14. Expert Tips to Save on Crypto Tax Legally

While tax avoidance is illegal, tax planning is not. Here are some smart ways to save:

• Use TDS credits properly during ITR filing

• Gift crypto to family (spouse or children) in a tax-free manner

• Diversify with equity and debt investments to balance your tax liability

• Book losses before year-end to neutralize gains (within crypto only)

• Split investments across financial years to reduce total liability

15. Commonly Asked Questions

Is crypto taxed in India?

Yes. Crypto profits are taxed at 30%, and TDS applies at 1% on transactions.

Do I need to file ITR if I only traded crypto?

Yes, if you earned income or had TDS deducted, ITR filing is mandatory.

Are NFTs also taxed?

Yes. NFTs fall under Virtual Digital Assets and are taxed similarly to cryptocurrencies.

Can I offset losses in one crypto with gains in another?

No. The Income Tax Act does not allow loss set-off or carry forward for VDAs.

Which ITR form is best for crypto earnings?

Generally, ITR-2 or ITR-3 depending on your overall income structure.

16. Final Thoughts

As cryptocurrency adoption increases, the Indian government has laid down a clear structure for taxation. Whether you’re a long-term investor, a frequent trader, or a crypto enthusiast, it’s crucial to follow the rules and file your taxes accurately.

Understanding how to file crypto tax in India will help you stay compliant, avoid penalties, and make informed investment decisions. With the right planning, tools, and guidance, you can navigate crypto taxation efficiently in 2025 and beyond.