Filing Crypto Losses? Here’s What You Should Know:
When dealing with crypto taxes in India, it’s important to note that crypto losses cannot be set off against other income or carried forward to future years.
Use Reliable Platforms For Accurate Reports:
To stay compliant with crypto taxes in India, use trusted crypto exchanges that provide transaction summaries. This ensures accurate calculations and hassle-free ITR filing.
Crypto Is Taxed Under New Guidelines:
Crypto assets fall under Virtual Digital Assets (VDAs). These include Bitcoin, Ethereum, NFTs, and other tokens traded online.
Flat 30% Tax On Gains:
The Indian government levies a flat 30% tax on all crypto profits. No deductions are allowed, except for the cost of acquisition.
1% TDS On Transactions:
Every crypto transaction attracts a 1% Tax Deducted at Source (TDS). This applies if total trade value exceeds ₹10,000 in a financial year.
When To File Crypto Income:
Crypto earnings must be reported during the annual ITR filing. The due date for individual taxpayers this year is July 31, 2025.
Which ITR Form To Use?:
If you have crypto earnings, use ITR-2 or ITR-3. ITR-2 is for salaried individuals, while ITR-3 suits business income or regular trading.
Step 1: Calculate Total Gains:
Sum up all your crypto profits for the financial year. Subtract the purchase price from the sale price to determine your gains.
Step 2: Include It Under ‘Other Income’:
Report crypto gains under ‘Income from Other Sources’ in your ITR. This ensures correct tax computation and avoids scrutiny.
Step 3: Pay Advance Tax If Needed:
If your crypto gains are high, you may need to pay advance tax in four parts. Missing this invites interest under Sections 234B and 234C.
Step 4: Report TDS Already Deducted:
Crypto platforms often deduct 1% TDS. Report this in your ITR under the TDS section to avoid paying the tax again.
Step 5: File ITR Before Deadline:
Missing the ITR deadline may result in a ₹5,000 late fee under Section 234F. File early to avoid last-minute technical issues.
Penalties For Hiding Crypto Income:
Non-disclosure of crypto income may attract penalties under Section 270A. This includes 50% of the tax due on underreported income.
Ensure Transparency In Records:
Keep clear records of all crypto trades—transaction dates, purchase values, sales amounts, and wallet addresses—for smooth verification.
What If You’ve Used Foreign Exchanges?
Traded on international exchanges? Report foreign assets under Schedule FA. Failure to do so may result in FEMA-related penalties.
Final Words: Stay Tax Compliant:
The government is closely watching crypto activity. To stay secure, follow tax rules carefully and report every crypto gain and deduction.