Crypto Tax India – The Ultimate Tax Guide (2024)

Crypto Tax India - The Ultimate Crypto Tax Guide

Do you regularly trade or invest in cryptocurrencies or other virtual digital assets? 

If you answer yes, you must pay cryptocurrency taxes in India.

But how much are you aware of laws on crypto tax in India? How much are you liable to pay on profits? What about airdrops, minting, mining, or NFTs? And what about crypto donations?

All these situations and scenarios require you to understand the entire crypto landscape of India in detail. Anybody investing in or trading cryptocurrencies or similar assets is supposed to pay crypto tax in India.

But how much?

And what about the different types of transactions? How does tax on crypto in India works?

How Is Cryptocurrency Taxed In India?

In 2022’s financial budget, the Indian government introduced a bill introducing a crypto tax in IndiaIndia considers crypto to be a virtual digital asset and levies 30% tax (with 4% cess and any applicable surcharge) on profits from trading cryptos. 

Crypto Tax In India

  • Section 2(47A) has been incorporated into the Income Tax Act to provide a clear definition and classification for Virtual Digital Assets.
  • Section 115BBH of the 2022 Budget levies a 30% tax (4% cess) on the profits of trading cryptocurrencies or other virtual digital assets from April 01, 2022. 
  • The 194S section also levies a 1% Tax at Source on the transfer of crypto and other VDAs  from July 01, 2022, if the transactions exceed INR 10,000 (even INR 50,000 in some cases) in the same FY.
  • The TDS rate applies to private investors, commercial traders, and anybody who transfers digital assets in a particular financial year. 
  • This tax rate applies regardless of the investor’s income and doesn’t distinguish between short-term and long-term gains.
  • If the transaction is made on an Indian exchange, the Indian exchange will deduct the TDS and pay the balance amount to the seller. In this case, the buyer need not take any action

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Latest Updates On Crypto Tax India

The Government and the Income Tax Department (ITD) have provided comprehensive guidelines regarding cryptocurrencies and the potential tax implications for investors in the last couple of years.

As of 2024, individuals investing in crypto and other virtual digital assets must disclose their income. If held as part of an investment portfolio, the gains should be declared capital gains. The assets should be reported as business income if they are fit for trading purposes. It’s important to note that individuals with business income should use ITR-3, not ITR-2, for filing.

For the financial year 2022-2023, the Income Tax Return now includes a dedicated section known as the Schedule Virtual Digital Assets. It is designed to report gains from crypto and other virtual digital assets. 

Penalties for non-compliance with cryptocurrency taxation in India have been introduced, including the failure to deduct TDS (Tax Deducted at Source) and the failure to deposit TDS, as outlined in sections 271C and 276B. 

Understanding The Sections

  • Section 271C Deals with penalties for failure to deduct or pay Tax Deducted at Source (TDS) or Tax Collected at Source (TCS).
  • Section 276B: Deals with prosecution for failure to deduct or pay TDS after deducting it.

Penalties Under Section 271C

  • Penalty amount: Equal to the amount of tax not deducted or paid.
  • Exception: Proving reasonable cause for non-compliance exempts from penalties.
  • Recent clarification: The Supreme Court ruled that Section 271C doesn’t apply to delays in remitting deducted TDS to the government treasury.

Penalties Under Section 276B

  • Punishment: Up to 7 years in prison, a fine up to 200% of the tax amount, or both.
  • Applicability: Only if there is willful non-compliance (intention to evade tax).
  • Threshold: Prosecution can only be initiated if the tax exceeds Rs. 50,000.

It is crucial to adhere to the deadlines set by the ITD. The Income Tax Return (ITR) for the fiscal year 2023-24 must be filed by July 31st, 2024. A belated return can be filed for those who miss the deadline until December 31st, 2024, along with interest and penalty, if any

Latest Update- Keypoints

  • FY 2022-2023 ITR includes Schedule Virtual Digital Assets.
  • Use ITR-3 for crypto business income and ITR-2 if receiving a salary in cryptocurrency.
  • Authorities introduced penalties for non-compliance, emphasising the deduction and deposit of TDS.
  • Section 271C: Penalty for TDS Deduction Failure:
    – The penalty equals the TDS amount due, determined by the Joint Commissioner.
  • Section 276B: Failure to Remit TDS to Government:
    Imprisonment from 3 months to 7 years.
    – Appropriate Fine

The 30% Tax Rate On Cryptocurrency In India

The 2022 Indian Financial Budget introduced us to a pretty hefty tax rate on the cryptocurrency forefront. This 30% tax rate applies to the following:

  • Trading cryptocurrencies with INR
  • Exchanging cryptocurrencies for other cryptocurrencies
  • Spending cryptocurrencies for goods or services.

Even though the 30% tax rate applies to trading, selling, or spending cryptos, plenty of other events are taxed differently. 

Let’s examine these transactions and discover how crypto tax in India functions.

Let’s explore all these types of transactions and understand how they are taxed in India.

Income Tax On Crypto Transactions

The ITD may consider your cryptocurrency transactions taxable income. In such cases, you must pay taxes at the individual tax rate upon receiving the income. This applies to various scenarios, including:

  • Receiving crypto as a gift
  • Mining crypto coins 
  • Receiving payment in cryptocurrency.
  • Earning staking rewards.
  • Receiving airdrops.

If you later decide to sell, trade or use the tokens acquired through the above scenarios, you will have to pay a CGT tax of 30% on any gains you make. 

Individual Tax Rates For FY 2023-2024

Here’s the new tax slab presented in the budget for 2023 for people aged up to 60. 

Tax Slab

Rates

Up to Rs. 3,00,000

NIL

Rs. 300,000 to Rs. 6,00,000

5% on income which exceeds Rs 3,00,000

Rs. 6,00,000 to Rs. 900,000

Rs 15,000 + 10% on income more than Rs 6,00,000

Rs. 9,00,000 to Rs. 12,00,000

Rs 45,000 + 15% on income more than Rs 9,00,000

Rs. 12,00,000 to Rs. 1500,000

Rs 90,000 + 20% on income more than Rs 12,00,000

Above Rs. 15,00,000

Rs 150,000 + 30% on income more than Rs 15,00,000

Income Tax Slab For Citizens Aged Between 60 to 80 Years

Tax Slabs

Rates

Rs. 2.5 lakhs

NIL

Rs. 2.5 lakhs – Rs. 3 lakhs

NIL

Rs. 3 lakhs – Rs. 5 lakhs

5.00%

Rs. 5 lakhs – Rs. 10 lakhs

20.00%

Rs. 10 lakhs and more

30.00%

Income Tax Slab For Citizens Aged Above 80 Years

Tax Slabs

Rates

Rs. 0 – Rs. 5 lakhs

NIL

Rs. 5 lakhs – Rs. 10 lakhs

20.00%

Above Rs. 10 lakhs

30.00%

Understanding Crypto TDS

Tax Deductible at Source (or TDS) was introduced alongside India’s 30% crypto tax under the Financial Budget 2022.

TDS aims to charge crypto investors and traders at the source for any transactions they make. When TDS is deducted, a person (the deductor) who owes a specific amount to another person or party (deductee) must deduct the TDS amount from the total invoice value/ payment at the source and remit it to the central government.

This TDS amount on crypto in India is deducted at 1%. 

From July 01, 2022, the buyer will deduct TDS at the 1% rate when paying the seller for the transfer of Crypto/NFT. If the transaction is made on an exchange, the exchange might deduct the TDS and pay the remaining balance amount to the seller. 

Indian exchanges automatically deduct the TDS. 

However, If a taxpayer trades on foreign exchanges, they must manually deduct TDS and file their TDS returns.

The TDS on cryptocurrency in India might be a dynamic approach as it might change over time. However, we can now understand the implications of this 1% TDS and how it affects you and your crypto trades.

New Penalties For Non-Compliance With TDS In The Crypto Space

Crypto investors in India are facing significant consequences. This follows the recent announcement by the Indian government, emphasising strict measures against traders not adhering to TDS rules.

Under the new regulations, failure to deduct and pay TDS to the government can result in penalties. This can be as grave as amounting to 100% of the TDS value. 

In some instances, offenders may also be subject to imprisonment. The period designated ranges from 3 months to 7 years, along with a fine. 

Let’s delve into the details of the legislation with illustrative examples.

Section 271C: Penalty For TDS Deduction Failure

If taxpayers neglect to deduct TDS, they may be penalised. This penalty is equivalent to the TDS amount due, as determined by the Joint Commissioner.

Example:

Aman bought Bitcoin worth INR 100,000. According to Section 194S, he must deduct 1% TDS before paying the seller.

If Aman fails to deduct the 1% TDS (INR 1,000) and submit it to the government. In such a case, he could face an INR 1,000 penalty imposed by the Joint Commissioner.

Section 276B: Failure To Remit TDS To The Government

Any taxpayer failing to remit TDS to the government may face imprisonment for a period ranging from 3 months to 7 years. Upon application by the ITD and with the prior approval of the Joint Commissioner, the court can impose a fine and imprisonment.

Example:

If Aman deducted the 1% TDS (INR 1,000), however, he failed to deposit it with the government. Aman could potentially be sentenced to 3 months to 7 years in jail and a fine

These new measures underscore the government’s commitment to enforcing TDS compliance in the crypto sector. It also urges investors to diligently follow the rules to avoid severe penalties and legal consequences.

Tax On Crypto Gains

Yes, crypto gains do attract crypto tax in India. If you’ve ever invested in cryptocurrency or other VDAs as a trader, your portfolio can either attract losses or profits.

Your crypto gains refer to the profit your crypto holdings gather over time.

This includes:

  • Your capital gains
  • Exchanging crypto assets
  • Using crypto to buy goods or services

These capital gains are taxed at a flat rate of 30% plus a 4% health and education. 

Example:

Aman bought Bitcoin for over INR 10,000 in Nov 2023 and sold it for INR 15,000 in Jan 2024. This results in a profit of INR 5000. This profit is treated as capital gains under Crypto/VDA assets (introduced in 2022) in India. Also, it is taxed as Capital Gains under cryptocurrency tax laws in India.

Profits made on crypto investments are among the most common methods of earning from cryptos.

Tax On Lost Or Stolen Cryptos

The Income Tax Department has not provided explicit guidance regarding lost or stolen cryptocurrencies. Drawing insights from past rulings by Indian courts on the loss or theft of different types of assets, it appears that no tax liability is incurred on crypto that is lost due to hacking, scams, or theft.

Despite this, claiming and offsetting a loss from a lost or stolen crypto asset against gains might be challenging. This is due to the ITD’s strict position on such offsetting. 

However, investors should be aware that even though there may not be a tax obligation for the lost crypto, offsetting losses against gains might face hurdles according to the ITD’s stringent approach.

Transactions That Are Free of Cryptocurrency Tax In India

Not every transaction is subject to crypto tax in India. Here’s a breakdown of when you won’t have to pay taxes on your crypto:

HODLing Crypto

Holding onto your cryptocurrency without engaging in any transactions is tax-free in India.

Transferring Crypto Between Your Wallets

Moving your crypto assets between your wallets also does not attract liabilities.

Receiving Gifts Of Crypto

You can receive crypto gifts without worrying about taxes under the following circumstances:

  • Receiving a gift of crypto up to INR 50,000 from friends and relatives.
  • Receiving a gift of any amount of crypto from close family members.

Hence, if you are holding onto your crypto, transferring it between your wallets, or receiving crypto gifts within the specified limits from friends and relatives, you won’t be required to pay taxes on these transactions in India.

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Tax On Airdrop

Airdrops are the initial tokens or coins you usually receive before a crypto project starts.

In India, crypto airdrops are treated as “Income from Other Sources” and are taxed according to the individual tax slab. This tax is calculated based on the fair market value of the tokens when you receive them, even though you didn’t buy them. 

Later, if you sell, swap, or use the airdropped tokens, you’ll be subject to a flat capital gains tax rate of 30%. 

This tax is applied to the difference between the fair market value on the sale date and the value when you received the airdrop, with an additional 4% health and education cess.

Example:

Ravi received 10,000 ABC tokens for holding 100 XYZ tokens, on April 1st, 2023, on that day the fair market value of ABC tokens was INR 10.

Ravi will be liable to pay tax at his slab rate on the ABC tokens he received, so he’ll pay Income Tax on INR 1,00,000.

If he later sells them at INR 20 each, his taxable gains would also be INR 1,00,000. With a 30% tax rate, he owes INR 30,000 in taxes.

Important: Crypto airdrops are considered gifts for tax purposes and could be eligible for tax exemption. However, you will qualify for a tax exemption if the total value of airdrops and gifts you receive in a year is within Rs 50,000.

Tax On NFT Trading

Non-fungible tokens (or NFTs) are taxed based on the nature of the transaction. Here’s how NFT taxes function in India:

Buying NFTs with Fiat Currency

Buying NFTs with fiat currencies such as INR or USD isn’t taxable.

Buying NFTs with Cryptocurrency

Buying NFTs using cryptocurrencies such as Ethereum and Polygon Matic is taxable. This exchanging of cryptocurrency for NFTs is considered an act of crypto disposal. Any gain from this transaction will be taxed at a flat rate of 30% plus a 4% health and education cess.

Selling NFTs

 Any gains enjoyed on selling NFTs will also be taxed at a flat rate of 30%. One must also pay a 4% cess on the Capital Gains Tax amount. The buyer will also deduct a 1% TDS of the selling amount. 

Tax On Mining Cryptocurrency

Crypto mining in India is subject to income tax, with the type of income determined by the scale of mining activities. 

If you mine crypto on a significant scale for profit, it’s classified as business income. You’re taxed based on regular slab rates and can claim deductions for expenses like mining rigs and electricity bills. 

However, if mining is more of a hobby, the rewards are considered “Income From Other Sources,” and no deductions are allowed. 

Selling mined crypto incurs a flat 30% capital gains tax rate plus a 4% health and education cess. Additionally, exchanges may charge a 1% TDS on sales.

Tax On Crypto Staking

Staking cryptocurrency in India incurs income tax on the fair market value of the staking rewards received in INR. This applies regardless of whether you sell the tokens. 

Additionally, any profits from selling, swapping, or spending staking rewards are subject to a 30% capital gains tax plus a 4% health and education cess. 

Furthermore, a 1% TDS is applicable on the selling price of the cryptocurrency deducted by the buyer.

Example:

Assume you stake 100 “X” coins to a validator that offers a 10% APR. Every year, you will receive 10% interest on your asset. This means your net asset will be 100+(100×10%)= 110 after one year. That implies you’ll receive 10÷365= 0.027% interest every day or 10÷12= 0.833% interest per month. 

Tax On Crypto Gifts

As per the Indian Tax Department, crypto gifts are movable property gifts. Hence, here are the types of crypto gifts that do not attract any taxes in India:

  • You do not have to pay taxes if you’ve received cryptocurrency gifts valued below INR 50,000 in a financial year.  
  • Crypto gifts from immediate family members, such as parents or siblings, do not incur crypto taxes in India. 
  • Crypto gifts received as wedding gifts, inheritances or in contemplation of death also remain tax-free in India. 

 

However, if you have received crypto gifts exceeding the value of INR 50,000, then you will have to pay Income Tax based on the individual slab rate. 

Tax On Crypto Salary

When you receive cryptocurrency as a salary in India, it’s taxed like any other income received in INR. 

You pay income tax based on the cryptocurrency’s market value converted to Indian Rupees on the day you receive it, according to your income tax slab. 

If you sell, exchange, or relinquish the cryptocurrency received as a salary, it’s treated as disposal and taxed at a flat rate of 30%, plus a 4% cess on the taxable amount. 

Additionally, a 1% TDS is deducted by the buyer on the selling price of the cryptocurrency.

Tax On Crypto Donations

In India, crypto donations are taxed similarly to other cryptocurrency transactions. This means that any cryptocurrency donations are subject to capital gains tax.

Capital gains tax applies to profits made from selling or exchanging cryptocurrencies. 

Donating crypto in India is seen as disposing of digital assets, and any resulting gains are taxed at a flat rate of 30%, plus a 4% health and education cess.

Tax On Crypto Referrals

In India, referral rewards earned through cryptocurrency are considered additional income. The tax rate on the fair market value of the cryptocurrency received depends on the taxpayer’s total annual income and can range from 0% to 30%.

When you sell, swap, or use the crypto rewards, you’re subject to Capital Gains Tax (CGT) at a flat rate of 30%, plus a 4% health and education cess on the CGT amount.

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Tax On Token Sales (ICOs And IDOs)

Income from ICOs and IDOs, including airdropped coins, is considered “Income From Other Sources” (IFOS). 

The tax authorities add the fair market value of received tokens to your annual income and tax it at 0-30%, depending on your tax slab.

When you exchange primary tokens like Ethereum and Bitcoin for ICO stakes, you are treating it as a crypto disposal. Profits from selling these tokens are taxed at a flat rate of 30%, plus a 4% health and education cess.

Selling tokens acquired from ICO or IDO airdrops also incurs capital gains tax at the same rate mentioned above. 

Tax On Futures/Derivatives Trading

Crypto futures trading involves buying or selling a specified amount of cryptocurrency at a predetermined price for future delivery. You can profit from price movements without owning the actual asset. It offers opportunities for speculation, hedging, and leveraging but carries risks due to market volatility.

Calculating the crypto trading tax in India based on the gains from futures trading can be a task. In India, the taxation of cryptocurrency futures trading involves several key considerations to ensure compliance with tax laws. Here’s a detailed explanation:

Initial Investment Stage

When an investor purchases cryptocurrency like USDT to participate in futures trading, this initial acquisition is treated as an investment. No tax is levied at this stage because it represents the entry point into the trading activity, similar to purchasing stocks or commodities.

Note: A few exchanges allow crypto futures trading in INR.

Profit Realisation and Taxation

Once trading begins and profits are realised, these gains are categorised as business income under Indian tax regulations. The taxable amount is computed based on the difference between the conversion rate used to calculate the profit and the rate at which the initial investment was made. 

This ensures that the profit generated from futures trading is accurately reflected and subject to taxation according to the individual’s income tax slab rate.

Conversion to INR

When an investor converts their total cryptocurrency holdings (including both principal investment and profits) into Indian Rupees (INR), the tax treatment considers two distinct components:

Tax on Principal Amount

This is the gain derived from the difference between the conversion rate and the rate at which the principal amount was initially acquired. It is subject to taxation at a rate of 30%, plus applicable surcharges and cess.

Tax on Profit Amount

Similarly, the gain on the profit amount is determined by the difference between the conversion rate and the rate at which the profit was realised. This gain is also subject to taxation at the same rate of 30%, plus 4% for health and education cess.

Additionally, a 1% Tax Deducted At Source (TDS) will be applied to the transaction value of the USDT you are converting back into INR.

Example:

Avani buys 1000 USDT @ INR 85 to enter crypto futures trading.

She makes a profit of 2000 USDT on the 1000 USDT principal. When realising the profit, the USDT price was INR 86.

Later, they convert the entire 3000 USDT (principal + profit) into INR at INR 86.5. The taxation would be as follows:

  1. On buying 1000 USDT @ INR 85 – No tax (This is just an investment, not a taxable event)
  2. On profit of 2000 USDT:

   – This would be treated as business income at the value: 2000 * INR 86 = INR 172,000

   – This amount is taxable at the applicable income tax slab rate of the individual

   – This becomes the cost basis for the 2000 USDT profit when it’s converted back to INR

When 3000 USDT is converted into INR (Principal + Profit):

  1. On the first 1000 USDT (principal amount):

      – Taxable gain: (INR 86.5 – INR 85) * 1000 = INR 1,500

      – Tax payable: 30% of INR 1,500 = INR 450 (plus applicable surcharge and cess)

       2. On the balance of 2000 USDT (profit amount):

      – Taxable gain: (INR 86.5 – INR 86) * 2000 = INR 1,000

      – Tax payable: 30% of INR 1,000 = INR 300 (plus applicable surcharge and cess)

Total tax liability:

  1. Income tax on futures trading profit (INR 172,000) at the applicable slab rate
  2. 30% tax on USDT to INR conversion gain: INR 450 + INR 300 = INR 750 (plus applicable surcharge and cess)

Other Crypto Trading Tax In India

So, how are other crypto trading taxed in India? Let’s begin with crypto spot trading. 

Spot Crypto Trading Tax In India

Crypto spot trading involves buying and selling digital assets for immediate delivery. Transactions occur instantly at the current market price, settling “on the spot” without the need for future delivery contracts. Now comes the question of how it is taxed.

In India, crypto spot trading is taxed uniformly at a flat rate of 30%, plus a 4% health and education cess under Section 115BBH of the Income Tax Act. This taxation applies irrespective of the holding period, eliminating distinctions between short-term and long-term gains. A 1% TDS is applicable on sale transactions exceeding Rs. 50,000 annually, starting July 1, 2022, covering the entire sale value. 

Importantly, no deductions or exemptions are permitted. This is in exception for the cost of acquiring the crypto asset, preventing offsetting losses from one trade against gains from another.

Margin Crypto Trading Tax In India

Crypto margin trading allows you to borrow funds, magnifying your market exposure beyond your initial investment. Using leverage, you can amplify profits and increase the risk of substantial losses. 

Crypto gains, including those from margin trading, face cryptocurrency taxation in India as income from virtual digital assets (VDAs) under Section 115BBH of the Income Tax Act, 1961. Brace yourself for a flat 30% tax rate, applicable surcharge and a 4% cess. 

Now, let’s delve into the details of margin trading taxation. 

Profits incurred from closing leveraged positions are subject to the 30% VDA tax. This is calculated as the sale price minus the acquisition cost, which includes borrowed funds. 

Unfortunately, VDA losses can’t offset other income categories and can only be carried forward for eight years. Forced liquidations due to margin calls are taxable events, with the sale price determining the profit or loss. Also, gains from crypto derivatives fall under the 30% VDA tax slab.

Starting July 1, 2022, a 1% TDS applies to cryptocurrency transfers exceeding INR 50,000 (or INR 10,000 for specific categories) on exchanges. It’s essential to note that this TDS isn’t your final tax liability but serves as an advance payment. Stay informed and navigate the crypto tax landscape with caution.

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Tax On DeFi Income In India

The ITD has yet to provide specific instructions regarding decentralised finance (DeFi) transactions. To understand the tax implications, we should look at the current rules outlined in the Income Tax Act. 

Here are some DeFi transactions that might be subject to taxation at your tax rate:

  • Earning New Tokens: This includes tokens gained through liquidity mining, governance activities, or as rewards.
  • Referral Rewards: Any rewards received through referral programs may be taxable.
  • Play-To-Earn Income: Income generated from play-to-earn activities within the DeFi space could be subject to taxation.
  • Browse-to-Earn Platforms: Platforms such as Permission.io or Brave, where users earn rewards for browsing, may also have tax implications.

Even if you paid taxes upon receiving the tokens, it’s important to remember that you may still be subject to a 30% CGT tax on any profits if you sell, swap, or spend them later.

Tax On Income From Consultancy Services

Income from consultancy in crypto refers to earnings generated by providing expert advice and guidance in the cryptocurrency industry. Crypto consultants offer insights on trading strategies, market analysis, blockchain technology, and regulatory compliance. They often charge fees for their services, contributing to their income in the rapidly evolving crypto space.

If earned in cryptocurrency, consulting income is considered IFOS and is subject to income tax as per the Income Tax Department (ITD). The applicable tax rate depends on the individual’s tax slab. A person can claim any necessary deductions from the same. 

Additionally, GST returns must be filed if eligible. Selling tokens later incurs a Capital Gains Tax (CGT) of 30% and a 4% cess on the tax amount. Stay informed about tax obligations in the dynamic crypto landscape to ensure compliance.

How To Make Your Tax Filing Convenient With KoinX?

We at KoinX offer a comprehensive taxation tool that easily integrates with your preferred exchange(s) and gives you a detailed report about your tax obligations. You can use this report to file your crypto taxes easily.

With its easy-to-navigate UI, simple exchange integration, and various features, our KoinX is on its way to becoming one of India’s fastest-growing crypto taxation platforms.

The feature of importing tax data gives you a slight advantage over other platforms. This is because you can easily forward this information to your tax advisor, who helps you file your taxes. 

Which ITR Should I File?

But which ITR form to file? This question needs to be clarified for most crypto tax investors.

If you earn cryptos using crypto staking, mining, as a salary, or trading, you should file an ITR-2. Our detailed guide on how to file an ITR-2 online can help you do so. Moreover, if you are mining, staking or farming crypto on a business level, you must file ITR-3. You can check out our latest guide on how to file an ITR-3 online.

How To File Crypto Tax in India With KoinX?

Let’s now explore how to file crypto taxes in India with KoinX. There are two ways to file crypto taxes in India: self-filing and a chartered accountant’s help. 

Step 1: Login To Your KoinX Account

The first step is to register or login to your KoinX account. 

Step 2: Integrate Your Accounts

Once logged in, you must integrate all your crypto wallets and exchanges on your profile for KoinX to import its data. We support integrations from over 270 exchanges, wallets, and blockchains

Step3: Generate Tax Report

Once you have integrated all your accounts, you must generate your crypto tax report. Click on Taxes and then press “Generate Tax Report.

You can download the file in either PDF or Excel format. Your KoinX tax report is ITR-compliant.

Use KoinX’s end-to-end filing assistance; you can purchase our bundle plan, which offers accurate crypto tax reports and a dedicated tax professional for ITR filing.

If you want to self-file your ITR, you can choose our basic payment plans based on the number of transactions you clock in a single financial year.

If you have bought our bundle plans, you don’t have to do anything after generating the tax reports; we will assign your case to one of our expert CAs, and the rest will be taken care of.

Step 4: Log-In To Income Tax Protal

If you want to self-file your ITR, visit income tax portal and login to your account. Click e-file > Income Tax > File Income Tax Return. 

Then choose the Assessment Year > Online (as filing mode) > Continue. 

Now, select Individual > Continue. Under “I know which ITR Form I need to file,” select “ITR-2” or “ITR-3.

Step 5: Report Your Capital Gains and Other Income

Click on Select Schedule > Income > Schedule VDA. Use Schedule VDA section from KoinX tax report to fill in each transaction on the profile. If you have other sources of income other than capital gains, click Schedule Income from Other Sources. 

Step 6: Verify Your Income Tax Return

Once you are satisfied with all your input click Submit and verify your return. Click Proceed for Verification and enter the OTP received on registered mobile number linked to your Aadhaar Card. 

Frequently Asked Questions

Let’s answer some of the frequently asked questions about crypto tax India:

Is GST Applicable To Crypto Transactions In India?

The Indian government’s stance on applying the Goods and Services Tax (GST) to cryptocurrency remains unclear. The existing GST Act needs to address VDAs, leading to ambiguity. Top Indian crypto exchanges actively seek clarification on whether GST should be imposed on crypto assets and who should be responsible for collecting it.

Can ITD Track Your Crypto Transactions?

The ITD utilises KYC data from domestic exchanges and a 1% Tax Deducted at Source (TDS) to monitor individuals’ crypto holdings, enhancing tax compliance efforts. This allows the ITD to request exchange data to track taxpayers’ assets accurately, streamlining the process.

When Do I Report Crypto Taxes To The Income Tax Department?​

In India, the financial year runs from April 1st to March 31st. The current financial year, FY 2023-24, spans from April 1st, 2023, to March 31st, 2024. Taxpayers must file for belated returns by July 31st, 2024 (non-audit cases), October 31st, 2024 (audit cases), or December 31st, 2024.

Which Cost Basis Method Is Accepted In India?

Investors face challenges tracking gains and losses across multiple crypto assets, complicating cost-basis calculations. Choosing a cost basis method, such as first in, first out (FIFO) or average cost basis (ACB), influences the determination of assets sold and timing, impacting overall gains and losses. FIFO and average cost are commonly recognised accounting methods for calculating crypto taxes in India.

Can You Offset Your Crypto Losses In India?

Indian investors face a setback as Section 115BBH bars offsetting crypto losses against gains or other income. Additionally, claiming crypto-related expenses is restricted and limited only to the cost of acquisition. This poses challenges for those seeking to mitigate losses and expenses in the crypto market.

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