The Income Tax Return (ITR) filing deadline in India is coming closer, with investors having little room for mistakes. Before filing your ITR, you have to pay extra attention to how to report your digital asset transactions. Although India now has comprehensive crypto tax regulations, many investors are still unaware of these rules. Whether you have traded Bitcoin, participated in an airdrop, or bought an $NFT, you have to stay compliant with India’s crypto tax rules.
Understanding India’s Crypto Tax Rules and ITR Filing
In 2022, the Indian government introduced crypto tax rules, including cryptocurrencies and other virtual assets (VDAs) under a separate tax regime. According to the law, investors who make profits by selling or transferring cryptocurrencies will be subject to 30% taxation. In addition to this, all crypto transactions above the prescribed threshold will have a 1% Tax Deducted at Source (TDS).
The crypto tax regulations also state that digital asset losses cannot be adjusted against profits. In simple terms, if you get profits on one crypto trade and mark losses on another, the 30% crypto tax rule will still be applicable on your gains. Sanjiv Malhotra, Senior Advisor and Head of Tax at Shardul Amarchand Mangaldas & Co, stated,
“The conventional concepts of short-term capital gains and long-term capital gains do not apply to crypto assets, and taxpayers cannot benefit from concessional long-term capital gains rates or indexation.”
Knowing all taxable crypto transactions is important to file an Income Tax Return (ITR). Only if you provide correct details on all your crypto and $NFT transactions can you remain compliant with the Indian crypto tax rules. Otherwise, you will face penalties or notices from the Income Tax Department.
How to Report Crypto in Your ITR?
It is worth noting that all your VDA transactions are required to be included in your ITR filing. The Income Tax Department, after introducing comprehensive crypto tax rules, has included the Schedule VDA section in the ITR form, where you can fill in the details of your digital asset sales or transactions.
In this section, the investor should provide details including the date of the purchase, date of sale, purchase price, sale price, and the type of income. Even if you have received the cryptocurrencies as a gift, it still comes under the crypto tax rules.
Another important thing to note is the 1% TDS. If this tax is deducted on your crypto transactions, you have to verify it in Form 26AS or AIS. This comes under Schedule TDS, where you can claim the tax credit while filing your return.
As per a previous CoinEdition report, many of the Indian investors are still ignorant of these crypto tax rules. They continue to remain non-compliant with these regulations, without filing the ITR. For the Assessment Year 2026-27, the last date to file your ITR is July 31, 2026.
How Are Different Crypto Transactions Taxed?
Interestingly, not all crypto transactions are taxed in the same way. For instance, if you buy Bitcoin or any other cryptocurrency and sell it later, marking a profit, you will face a tax of a flat 30% on your gains. In addition, each transaction will be subject to the 1% TDS.
In case of an airdrop, if you receive a token via an airdrop, the crypto will be treated as a taxable asset. If you sell this crypto at a profit, again, you will be under the 30% crypto tax rule.
NFTs or non-fungible tokens are also classified as VDAs in India. Thus, the same crypto tax rules are applicable for NFTs as well. Gains on $NFT sales will be taxed under the same rules. Gifted cryptocurrencies are also taxed depending on who gifted you and how you send them.
The only transaction that is exempted from these crypto tax rules is the transfers between addresses of the same owner. Raghav Bajaj, Partner at Khaitan & Co, stated, “Wallet-to-wallet transfers between accounts held by the same person are not taxable transfers, as there is no change in ownership.” He added,
“The key governing provisions are Section 2 (47A) of the Income Tax Act, 1961 (corresponding Section 2 (111) of the Income Tax Act, 2025) which defines VDAs; Section 115BBH (corresponding Section 194 of the new law) which taxes income from transfer of VDAs at 30%; and Section 194S (corresponding Section 393 of the 2025 Act) which mandates 1% TDS on specified transfers.”
Expenses and Losses You Can’t Claim
Along with knowing what to include in the ITR filing, it is also important to understand what expenses you can claim as deductions. Under the Indian crypto tax rules, the only expense you can deduct is the purchase price. Other expenses, including exchange fees, brokerage charges, wallet fees, gas fees, mining costs, and transaction charges, cannot be included in this category.
Conclusion
As the ITR filing deadline is approaching, Indian crypto users and investors should be vigilant about their transactions. If you have traded and gained from cryptocurrencies, NFTs, or airdrops, you are required to file ITR on time. Any failure in compliance will make you face the risk of penalties and notices from the tax department.
Related: Licensed Crypto Exchanges in Nigeria (2026): What Happens If You Use an Unlicensed Platform?
