How to Pay Crypto Tax in India (2025): A Step-by-Step Guide

TIME OF HINDUSTAN

2 weeks ago

Introduction: Why Crypto Tax Matters Now

Cryptocurrency in India has moved from niche curiosity to mainstream asset. The government’s clear stance—30% tax on profits and 1% TDS on every transaction—along with mandatory reporting under Schedule VDA, means it’s crucial for investors and traders to stay compliant

Whether you’re a casual HODLer or a dedicated trader, this guide will help you understand how to accurately calculate, correctly report, and confidently pay your crypto taxes in India.

1. Understanding the Tax Rules 📘

A. What’s Taxed?

Virtual Digital Assets (VDAs) include cryptocurrencies (like Bitcoin, Ethereum), NFTs, and other blockchain tokens
Taxable events:
Selling crypto for INR or fiat
Swapping one crypto for another
Using crypto as a payment method

B. Crypto Tax Rates

30% flat tax on profits (Section 115BBH; no short/long-term distinction)
4% cess and applicable surcharge on this tax amount
1% TDS on every transfer of VDAs, deducted at source—this is NOT optional

C. What You Can’t Do

No deductions allowed except purchase price (ignore transaction fees, etc.)
Losses from crypto cannot offset gains from other income or future VDA gains

2. Getting Your Records in Order 📊

Accurate tracking is critical:

Export transaction history from all exchanges and wallets.
Categorize each transaction: buy, sell, swap, spending, gifting.
Note: date, asset, quantity, INR equivalent, profit/loss, TDS deducted.

📌 Tip: Use a crypto tax tool like Koinly, CoinDCX or KoinX to simplify this

3. Calculating Tax Payable

A. Calculate Crypto Gains

Use FIFO or another consistent method for cost basis.
Gain = INR value at sale minus purchase INR value.
Example:
Bought 1 BTC at ₹15 lakh, sold for ₹20 lakh → Profit = ₹5 lakh.
Tax = 30% → ₹1.5 lakh + cess → ₹1.56 lakh.

B. Tally Up TDS

If TDS was deducted (1% of sale/transfer), you’ll see a credit in Form 26AS.
This reduces your net tax outgo. If excess TDS was withheld, you’ll get a refund.

4. Paying Advance Tax (If Applicable)

If your tax liability exceeds ₹10,000 in a financial year, you must pay advance tax in instalments:

15th June: 15%
15th September: 45%
15th December: 75%
15th March: 100%

If you miss the schedule, interest applies—but no penalties.

5. Reporting Crypto in ITR (`Schedule VDA`)

A. Choose the Right ITR Form

Use ITR‑2 (non-business crypto income) or ITR‑3 (if crypto is business income) ([dineshaarjav.com][5]).

B. Fill in Schedule VDA

Report total transfer value, cost, profit, tax paid, and TDS details .

C. Attach Reports & File

Submit your crypto summary as an annexure (often required by platforms like CoinDCX).
File before the deadline: 15 Sept 2025 for FY 2024‑25

6. Reporting Other Crypto Income

Airdrops / Gifts: Taxable at 30% if value exceeds ₹50,000; gift receiver pays ([coindcx.com][1]).
Mining / Staking / DeFi Rewards:
Income taxed as business/income from other sources, then VDA tax applies on later sale.
Crypto salary:
Treated as regular income first, then taxed again on VDA transfer

7. Staying Compliant (New Updates)

Mandatory reporting by crypto exchanges under Schedule 158B, effective FY 2025‑26
Crypto-Asset Reporting Framework (CARF)—global information sharing—will increase scrutiny
Penalties exist for non-reporting or misreporting crypto income: penalties, interest, or prosecution

8. Filing Step-By-Step

Collect transaction history & TDS data
Use a crypto tax tool to generate gain and TDS report
Deposit advance tax if due: via Income Tax Portal → e‑pay tax → choose Advance Tax
File ITR‑2/3: populate Schedule VDA, attach annexure
Verify ITR via Aadhaar OTP, EVC, or physical return

9. Pro Tips for Filing with Ease

Track Form 26AS to verify TDS credits.
Schedule time in July–Sept for accurate filing and renewal.
Use tax tools (like CoinDCX / KoinX) with exportable Excel/PDF formats.
Record as you go—monthly backups cut errors.
Consider CA assistance if trading heavily or running mining/DeFi income streams.

10. Consequences of Non-Compliance

The Income Tax Department has been actively sending notices since Disclosures in Schedule VDA were mandated Ignoring this could result in:

High penalties (50–200% of tax due)
Interest on late payments
Criminal prosecution, including jail sentences ([coindcx.com][1])

Infographic titled “How to Pay Crypto Tax in India” showing eight steps with icons: Understand the Rules, Get Your Records in Order, Calculate Gains & TDS, Pay Advance Tax, Report in ITR, Stay Compliant, Report Other Income, and File & Verify—all set against a blue and white color scheme.

📌 Summary Table

Step	Task	When
1	Download tx history	Monthly
2	Calculate gains, TDS	Quarterly
3	Pay advance tax	Jun/Sep/Dec/Mar
4	Generate crypto tax report	Before ITR filing
5	File ITR‑2 / Schedule VDA	By 15 Sept 2025
6	Verify & retain documents	Post-filing

✅ Final Thoughts

The crypto tax landscape in India is evolving fast. With flat 30% profits tax, 1% TDS, and mandatory VDA reporting starting this year, staying compliant requires attention but isn’t overwhelming if tracked well.

Start with good record-keeping, leverage crypto tax tools, and file both TDS and annual tax returns diligently. Missed filings or improper reporting can lead to serious consequences—including penalties, interest, and notices from the tax department.

By following this guide, you’ll not only be tax-compliant, but also positioned for smart, confident crypto investing in India’s regulated environment.

✅ Disclaimer:

This article provides educational information only. Consult a registered Chartered Accountant (CA) or a professional tax advisor to match your individual tax situation and comply precisely with the law.

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