Under India’s current framework, income from cryptocurrencies—including trading gains, staking rewards, mining income, and airdrops—is taxed at a flat 30%, along with a 1% tax deducted at source (TDS) on transactions.
While the rules are defined, industry participants say execution remains key.
How to calculate taxable crypto income
According to Edul Patel, CEO, Mudrex, the first step is to calculate total taxable income across all crypto activities. This includes profits from buying and selling digital assets as well as income earned through staking, mining, or token distributions.
He noted that only the cost of acquisition can be deducted, and losses cannot be set off against other income, making precise calculation essential.
How to choose the right ITR form
Investors must also determine the correct filing category. Occasional investors typically file under ITR-2, while those trading frequently or operating in a business capacity are required to file under ITR-3.
How to track and reconcile TDS
The 1% TDS deducted on each transaction must be carefully tracked and matched with Form 26AS. Any mismatch between exchange records and tax statements could lead to discrepancies or scrutiny from authorities.
How to maintain records and avoid last-minute issues
Sumit Gupta, Co Founder at CoinDCX, said investors should maintain detailed records of every transaction throughout the year rather than relying on last-minute reconciliation. He added that the introduction of ‘Schedule VDA’ in ITR forms has made reporting more structured, but accuracy still depends on user diligence.
Platforms such as CoinDCX and Mudrex have introduced tools like automated TDS deductions, transaction summaries, and tax-ready reports to simplify compliance.
What investors should do before March 31
With the deadline nearing, experts suggest investors:
- Consolidate transaction data across exchanges and wallets
- Verify TDS credits in Form 26AS
- Classify all sources of crypto income correctly
- Ensure documentation is complete and accessible
As compliance requirements tighten, a step-by-step approach to reporting may help investors avoid errors and ensure smoother ITR filing in an increasingly regulated crypto market.
