Have you earned income through crypto mining or staking, or enjoyed profits from the disposal of digital assets? If yes, know that the Income Tax Department wants you to report each and every crypto transaction that you incurred during a financial year. But how to report it?
Introduced in the Finance Bill 2022, Schedule VDA is a dedicated section in your ITR form. Report all income from Virtual Digital Assets, including Bitcoin, Ethereum, NFTs, or any other crypto asset, here.
In this guide, we will discuss everything related to Schedule VDA, from what counts as a VDA to how you can calculate your taxes and file your return correctly for FY 2025-26 (AY 2026-27).
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Key Takeaways
- Crypto income in India is taxed at a flat 30% under Section 115BBH, regardless of your income level or holding period.
- All crypto gains must be reported under Schedule VDA in either ITR-2 or ITR-3. ITR-1 and ITR-4 cannot be used for crypto income.
- As per Section 194S 1% TDS is deducted on every VDA transfer exceeding INR 10,000 or INR 50,000 for specified individuals or HUFs with business income more than INR 1 crore or professional income more than INR 50 lakhs in a financial year.
- Crypto losses cannot be offset against any other income or carried forward to future years under Section 115BBH(2)(b).
- The filing deadline for ITR-2 in AY 2026-27 is July 31, 2026 and for ITR-3 is April 31, 2026, with a belated return option until December 31, 2026.
- Before filing, always reconcile your Schedule VDA entries with your AIS data on incometax.gov.in, or it may lead to mismatches and tax notices from the ITD.
- Budget 2026-27 has introduced stricter exchange reporting penalties, making AIS data more comprehensive and accurate than in previous years
What is Schedule VDA?
If you’re in India and dealing with cryptocurrencies or other virtual digital assets (VDAs), you’ve likely come across the term “Schedule VDA.” But what exactly is it? Don’t worry; understanding it’s less complex than it might sound.
Schedule VDA is a section of specific Indian income tax return (ITR) forms. It is valid from FY 2025-26. It’s where you report any income you earned from buying and selling VDAs, like Bitcoin, Ethereum, or even NFTs. It’s a way for the government to track and tax your crypto activity.
Think of it as a separate page in your tax return for your crypto dealings. It asks for details like:
- Date you bought the VDA: This helps determine how long you held it, which affects the tax rate.
- Date you sold the VDA: This helps track your profit or loss.
- The amount you paid for the VDA is your “cost of acquisition,” which is essential for calculating your taxable profit.
- The amount you received for selling the VDA: This is your income.
Accurately filling out Schedule VDA ensures you comply with tax regulations and avoid potential penalties.
What are Virtual Digital Assets (VDAs)?
Before we get into Schedule VDA, it’s important to know what the term “Virtual Digital Asset” means. This is because not everything digital qualifies.
Under Section 2(47A) of the Income Tax Act, 1961, a Virtual Digital Asset is defined as any information, code, number, or token (barring Indian or foreign currency) generated through cryptographic means or otherwise. It also provides a digital representation of value. Moreover, it can be exchanged with or without consideration, functions as a store of value or unit of account, and can be transferred, stored, or traded electronically.
In simple terms, this definition covers:
- Cryptocurrencies such as Bitcoin, Ethereum, and other tokens generated through cryptographic means.
- Non-Fungible Tokens (NFTs) and any other token of a similar nature.
- Any other digital asset that the Central Government may notify via the Official Gazette.
What is Not Considered a VDA:
- Indian Rupee (INR) or any foreign currency.
- Central Bank Digital Currency (CBDC) issued by the RBI.
- Gift cards, vouchers, mileage points, or loyalty rewards used for goods or services.
What is Schedule VDA?
Schedule VDA is a dedicated section within the ITR-2 and ITR-3 forms where you report all income earned from Virtual Digital Assets. Think of it as a separate page in your tax return specifically for your crypto dealings.
When filling out Schedule VDA, you’ll need to provide the following details for each transaction:
- Date of acquisition: When did you buy or receive the VDA?
- Date of transfer: When did you sell, swap, or spend it?
- Cost of acquisition: The amount you paid for it will be used to calculate your taxable profit.
- Sale consideration: The amount you received from the transfer.
Once you enter these details, the Income Tax portal automatically computes your profit or loss. Accurately completing Schedule VDA ensures you stay compliant and avoid penalties from the Income Tax Department. But let’s see how it is taxed first.
How are Cryptocurrencies Taxed in India?
If you’ve earned or gained money from crypto in India, three types of taxes could apply to you depending on the nature of your transaction:
Capital Gains Tax
Under Section 115BBH of the Income Tax Act, all profits from the transfer of Virtual Digital Assets are taxed at a flat rate of 30% plus 4% health and education cess, regardless of your income slab or how long you held the asset. This applies to selling, swapping, or spending crypto. Only the cost of acquisition is allowed as a deduction, no other expenses or exemptions apply.
Tax Deducted at Source (TDS)
Under Section 194S, a 1% TDS is deducted on every VDA transfer exceeding INR 10,000 in a financial year (INR 50,000 for specified individuals and HUFs). This is deducted at the point of transaction, not on profits, and can be claimed as a credit when filing your ITR.
Income Tax
Certain crypto activities are not treated as transfers and are instead taxed as Income from Other Sources at your applicable slab rate. These include:
- Receiving crypto as airdrops
- Earning new coins through mining
- Receiving staking rewards
- Getting paid in crypto for services
- Receiving crypto as a gift (if value exceeds INR 50,000)
Can You Set Off Your Crypto Losses in India?
Unfortunately, no. Under Section 115BBH(2)(b) of the Income Tax Act, crypto capital losses cannot be offset against any other income, whether that’s salary, business income, or gains from other assets. Nor can they be carried forward to future years.
This means if you sell a cryptocurrency for less than you paid for it, that loss is a dead end from a tax perspective. It cannot reduce your tax liability on profits from other crypto assets, let alone from other sources of income.
This rule applies to all types of Virtual Digital Assets without exception.
Budget 2026-27: What Changed for Schedule VDA Filers?
Budget 2026-27 did not change the core crypto tax rates, the 30% flat tax and 1% TDS remain unchanged. However, it introduced a significant compliance charge that directly affects how accurately you fill Schedule VDA details on tax:
Stricter Exchange Reporting Penalties (Section 446 & Section 509)
Under amendments introduced in the Finance Bill 2026, entities required to furnish statements on crypto-asset transactions under Section 509 of the Income Tax Act will face penalties for non-compliance, effective April 1, 2026.
A penalty of INR 200 per day applies for non-furnishing of the required statement, and INR 50,000 for furnishing inaccurate particulars or failing to correct them.
What this Means for Your Schedule VDA Filing
As reporting by exchanges and intermediaries becomes stricter, the government is likely to have more detailed and accurate information regarding cryptocurrency trading. Individual taxpayers must now become more careful, more transparent, and more disciplined while filing the ITR and reconciling Schedule VDA with Form 26AS and other available records.
Which ITR Forms Do You Need to Fill for Crypto Taxes?
Before diving into how to file your ITR forms, it is essential to discuss what they are. In India, Income Tax Return (ITR) forms are documents that taxpayers use to report their income earned during a financial year (April 1 to March 31) and the taxes paid to the Income Tax Department of India. These forms vary based on the source and amount of income and the category of the taxpayer.
Which ITR Forms Should You Fill to Report Your Crypto Taxes?
Not all crypto investors file the same ITR form. The right form depends on whether you interact with crypto as an investor or as a business. Here’s how to decide:
Use ITR-2 If You are:
- An individual or HUF who buys and sells crypto occasionally as an investment.
- Someone who receives crypto as a gift, airdrop, or staking reward but has no business setup.
- A salaried employee who also trades crypto on the side.
- Someone with capital gains from crypto but no business or professional income.
Use ITR-2 If You are:
- An individual or HUF who buys and sells crypto occasionally as an investment.
- Someone who receives crypto as a gift, airdrop, or staking reward but has no business setup.
- A salaried employee who also trades crypto on the side.
- Someone with capital gains from crypto but no business or professional income.
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How Can You File Your Income Tax Return Online?
Here’s a step-by-step guide on how you can fill out your ITR form online:
Step 1: Log In
Step 2: Select “File Income Tax Return”
- Click on the ‘e-File’ tab.
- Then, select ‘Income Tax Returns’.
- After that, choose ‘File Income Tax Return’.
Step 3: Choose The Correct “Assessment Year”
- Choose the ‘Assessment Year’ as ‘AY 2025-26‘.
- Select the mode of filing as ‘Online’.
Step 4: Select Your Status
- Pick your filing status: Individual, HUF, or Others.
- Choose ‘Individual’ and click ‘Continue’.
Step 5: Choose The Type Of ITR Form You Need To Fill
Now, you must select the type of Income Tax Return (ITR) form that matches your tax situation. As explained above, seven different ITR forms are available, each suited for various taxpayers and income sources.
For instance, individuals and HUFs who don’t have income from businesses or professions but have capital gains can use ITR 2.
Step 6: Select The Reason Why You're Filing Your Income Tax Return (ITR).
Next, you’ll need to indicate why you’re filing your returns. Choose the option that best fits your situation:
- If your taxable income exceeds the basic exemption limit.
- If you meet specific criteria that mandate filing ITR.
- If none of the above applies to you, select ‘Others’.
Step 7: Select The Respective Schedule
- On the following page, under the “Select Schedule” section, choose “Income“.
Step 8: Choose Schedule VDA
Scroll down the page and tick the box next to “Schedule VDA“. Then, click on “Continue” to proceed.
Step 9: Report Your Capital Gains In Schedule VDA
- After selecting Schedule VDA, click “Add Another” on the subsequent page.
- On the subsequent page, you must provide the following information for each crypto trade to add them to Schedule VDA. You should repeat these steps multiple times to include all your transactions.
- After inputting all your transactions with the necessary details, the Income Tax Portal will automatically compute your profit and loss.
- Once you’ve reviewed your figures and are satisfied with the Schedule VDA information, click “Confirm” to finalise this section.
Step 10: Add Other Information
- Choose “Schedule Income from Other Sources” on the schedules summary screen.
- Then, select “Gross Income Chargeable to Tax at Normal Applicable Rates” and proceed to add the relevant details.
- For the nature of income, opt for “Any Other Income” and proceed to add the necessary information.
Step 11: E-Verify Your Return
The final and most essential part is to verify the return. Failure to do so is akin to not filing it at all. You can e-verify your return through various methods such as Aadhaar OTP, electronic verification code (EVC), Net Banking, or by sending a physical copy of ITR-V to CPC, Bengaluru.
You need to have a detailed record of your transactions handy to file schedule VDA details correctly in your ITR. This is where KoinX can help. Let’s not understand its features in detail.
How Can KoinX Help You File Schedule VDA?
Filing Schedule VDA across multiple exchanges and wallets can get complicated real quick. KoinX is built to handle exactly this kind of complexity, helping Indian crypto investors stay compliant without spending hours on manual calculations.
Automatic Transaction Classification
KoinX connects to your wallets and exchanges, automatically identifying and classifying every transaction, trades, staking rewards, airdrops, NFT sales, and more, as the correct taxable event. This removes the need to manually tag hundreds of entries and reduces the risk of misclassification in your Schedule VDA.
Accurate Capital Gains Computation
For every transaction, KoinX calculates your gain using the correct cost of acquisition and the fair market value at the time of disposal. The results are fully aligned with Section 115BBH requirements, giving you a reliable and audit-ready figure to report.
Schedule VDA-Ready Tax Reports
KoinX generates tax reports formatted specifically for Indian ITR filing requirements. The reports are structured to match the Schedule VDA format exactly, making it straightforward for you or your CA to transfer the figures directly into your ITR-2 or ITR-3.
TDS Tracking and Reconciliation
The platform tracks the 1% TDS deducted across all your transactions and reconciles it with your Form 26AS data. This ensures you claim every eligible TDS credit and do not miss any deduction that could reduce your final tax liability.
Expert CA Support
If your crypto activity is high-volume or complex, KoinX connects you with verified Chartered Accountants who specialise in crypto taxation. They can review your Schedule VDA entries, verify your reports, and guide you through the filing process.
Filling Schedule VDA across multiple platforms does not have to be a manual process. Get started with KoinX today and head into tax season with every transaction accurately recorded and every liability correctly computed.
Conclusion
Reporting crypto income in India is no longer optional, and with Schedule VDA now a mandatory part of your ITR, getting it right matters more than ever. Whether you’re declaring gains from trading, income from staking, or receipts from airdrops, every transaction needs to be accurately reported under the correct head of income.
The best thing you can do is stay ahead of it: maintain clean records throughout the year, and choose the right ITR form for your situation. KoinX takes the complexity out of this process, automatically classifying your transactions, computing your gains, and generating Schedule VDA-ready reports so you can file with confidence. Sign up on KoinX today and make this tax season your most organised one yet.
Frequently Asked Questions
What Comes Under VDA?
Under Section 2(47A) of the Income Tax Act, a Virtual Digital Asset includes any information, code, number, or token, not being Indian or foreign currency, generated through cryptographic means that provides a digital representation of value. This broadly covers cryptocurrencies like Bitcoin and Ethereum, non-fungible tokens (NFTs), and any other digital asset notified by the Central Government. Gift cards, loyalty points, and CBDCs issued by the RBI are specifically excluded.
Which ITR is Applicable for VDA?
Crypto income must be reported under Schedule VDA in either ITR-2 or ITR-3. ITR-2 applies if you treat crypto as an investment with no business income, while ITR-3 is required if you trade crypto as a business activity. All gains declared under Schedule VDA are taxed at a flat rate of 30% under Section 115BBH. ITR-1 and ITR-4 cannot be used for reporting VDA income under any circumstances.
Is VDA Legal in India?
Cryptocurrencies and other VDAs are not recognised as legal tender in India, meaning they cannot be used as official currency for everyday payments. However, buying, selling, and holding these assets is entirely legal. The government has chosen to regulate rather than prohibit VDAs, introducing a formal tax framework under the Finance Act 2022 to bring digital asset transactions within the income tax net.
What if I Do Not Report VDA in ITR?
Failure to report VDA income can result in penalties, scrutiny notices, reassessment, and in serious cases, prosecution for tax evasion. If you have VDA activity and leave Schedule VDA empty or incomplete, your return can be marked defective, which in practice is treated almost like not filing at all until you correct and resubmit it. You can correct past omissions by filing an Updated Return (ITR-U) under Section 139(8A) within 24 months, though additional penalties will apply.
