Cryptocurrency

How to Declare Cryptocurrency Income in Your ITR This Financial Year (2025–26)

Published

2 days ago

July 24, 2025

rsuser

Cryptocurrencies like Bitcoin, Ethereum, and even meme coins such as Shiba Inu and Dogecoin are no longer niche digital assets in India. As adoption grows, so does the attention from the Income Tax Department. If you’ve traded, earned, or invested in cryptocurrencies during FY 2024–25, it’s important to know that declaring your crypto income in the Income Tax Return (ITR) is not optional—it’s mandatory.

In this comprehensive guide, we’ll walk you through:

How to classify your crypto income
Which ITR form to use
How to report gains/losses using Schedule VDA
TDS implications under Section 194S
Common mistakes to avoid

Let’s break it down so that even a first-time crypto investor can navigate tax season confidently.

Next Big Meme Coins in 2025? Top Shiba Inu Alternatives with 100x Potential

📌 Is Cryptocurrency Taxable in India?

Yes. The Indian government formally recognized cryptocurrencies as Virtual Digital Assets (VDAs) in Budget 2022. From April 1, 2022, a 30% tax applies to gains from VDAs, and 1% TDS under Section 194S applies from July 1, 2022.

So whether you made profits by trading, mining, receiving crypto as gifts, or using it as payment—you need to disclose it in your ITR this financial year (AY 2025–26).

📖 Reference: Live Mint, Moneycontrol, Income Tax India Portal

🧾 Types of Crypto Transactions You Must Report

Here are the most common crypto-related income types you need to declare:

Trading profits/losses (buying & selling coins on exchanges)
Airdrops or mining rewards
Staking income
Crypto received as salary or payment
Gifts received in crypto
Barter transactions involving crypto

Even if you made losses, you must report them—though crypto losses cannot be adjusted against other incomes.

🧮 Which ITR Form to Use for Crypto Income?

This depends on the nature of your crypto transactions:

Scenario	Suitable ITR Form
Salaried individual + crypto investments	ITR-2
If crypto is a business activity (frequent trading, mining, etc.)	ITR-3
Presumptive business income	ITR-4 (if applicable)

For most retail investors, ITR-2 with Schedule VDA is the correct form.

How to Earn from Cryptocurrency Without Trading | 5 Proven Passive Income Strategies (2025)

📊 What is Schedule VDA?

Schedule VDA (Virtual Digital Assets) is a dedicated section introduced in the ITR forms to disclose crypto income.

You’ll need to mention:

Date of acquisition and transfer
Name of VDA (e.g., Bitcoin, Shiba Inu)
Cost of acquisition
Sale consideration
Net gains
TDS deducted (if any)

This format brings transparency and ensures traceability.

🧾 Reference: The Financial Express

💰 TDS on Crypto Transactions – Section 194S

From July 1, 2022, 1% TDS is deducted on crypto transactions exceeding ₹10,000 in a financial year (₹50,000 for certain individuals). This applies regardless of profit or loss.

TDS should be shown in Form 26AS
You can claim credit for TDS deducted while filing your ITR
Even if TDS is already paid by the exchange, you still have to report the full income

🛠️ Step-by-Step: How to File ITR with Crypto Gains

Here’s how to declare crypto gains in ITR-2 for FY 2024–25:

✅ 1. Login to the Income Tax e-Filing Portal

Visit incometax.gov.in, log in with your PAN, and start a new return for AY 2025–26.

✅ 2. Select ITR-2 and Choose the Correct Filing Type

Choose whether you’re filing with help (assisted) or on your own.

✅ 3. Fill in Personal and Salary Details

Complete standard sections like salary, house property, and deductions under 80C, 80D, etc.

✅ 4. Navigate to ‘Schedule VDA’

Enter each VDA transaction separately
Provide details: purchase/sale date, cost, consideration
Mention net capital gains (short-term or long-term not applicable — taxed at flat 30%)

✅ 5. Disclose TDS under ‘Tax Details’

Cross-verify from Form 26AS and AIS (Annual Information Statement).

✅ 6. Validate, Preview, and Submit

Ensure there are no mismatches. Submit and e-verify your return using Aadhaar OTP or net banking.

🧮 Tax Calculation Example

Let’s say you bought Ethereum for ₹1,50,000 in Sept 2024 and sold it for ₹2,10,000 in Jan 2025. Here’s how to compute:

Gain = ₹2,10,000 – ₹1,50,000 = ₹60,000
Tax @ 30% = ₹18,000
Add cess @ 4% = ₹720
Total Tax = ₹18,720

You must report this under Schedule VDA in ITR-2, and if the exchange deducted 1% TDS = ₹2,100, you can claim it back.

🚫 Crypto Income Reporting Mistakes to Avoid

Even seasoned investors often slip up on crypto disclosures. Watch out for:

❌ Skipping small gains (even ₹500 must be reported)
❌ Ignoring TDS entries (cross-check Form 26AS)
❌ Clubbed reporting – report each transaction individually
❌ Not reporting foreign wallet income (e.g., Binance, KuCoin)

📅 Important Deadlines – AY 2025–26

ITR Filing Due Date (Individual): July 31, 2025
TDS Return Due (Quarterly): 31st of next month after quarter
Revised Return Deadline: Dec 31, 2025

Missing deadlines could lead to penalties and scrutiny from the Income Tax Department.

⚖️ What If You Don’t Report Your Crypto Income?

Not declaring crypto income could attract:

Penalty under Section 270A: 50% of tax payable
Interest under Section 234A/B/C
Income Tax Notice or even scrutiny audit
Seizure in extreme cases (as per Times Now)

The Income Tax Department is actively using AIS data, exchange tie-ups, and PAN-Aadhaar links to trace undeclared crypto gains.

🧠 Pro Tips for Smooth Crypto Tax Filing

✔ Maintain transaction history with time stamps
✔ Download TDS certificates from exchanges like WazirX, CoinDCX
✔ Use crypto tax tools like Koinly or Cleartax Crypto
✔ Consult a qualified CA if trading is frequent
✔ Keep a record of foreign wallets or peer-to-peer transactions

🔍 FAQs

Q1. Can I offset crypto losses against other income?

No. As per current rules, crypto losses can’t be adjusted against salary, house rent, or other capital gains.

Q2. Do I need to report airdrops or free coins?

Yes. Even if you didn’t sell them, they must be disclosed under ‘Other Income’.

Q3. Which exchanges report TDS to the government?

Registered Indian exchanges like WazirX, CoinDCX, and ZebPay report 1% TDS as per Section 194S.

📝 Conclusion

Cryptocurrency taxation in India may seem complicated, but it becomes manageable when broken into structured steps. With Schedule VDA, ITR-2, and Section 194S TDS provisions in place, the government has laid out clear guidelines for compliance. By reporting your crypto income transparently and on time, you not only stay legally safe but also avoid unnecessary penalties and scrutiny.

So, don’t wait until the last week of July. Begin reviewing your crypto statements today and declare your crypto gains confidently—because financial transparency is always a smart investment.