If you forgot to include your crypto gains in last year’s tax return, you’re not alone. Many crypto users in India miss reporting their trades, either because they didn’t know it was taxable or they weren’t sure how to file it correctly. But skipping it entirely can lead to notices, penalties, or even reassessment.
Thankfully, the Income Tax Department has provided a way to fix it. Whether you traded on Indian or foreign exchanges, or just missed adding some gains, this guide will walk you through how to report them now, accurately and legally. From choosing the right ITR form to filing an Updated Return and claiming TDS, here’s everything you need to know to set things right.
Common Reasons for Missing Crypto Income in ITR
Many taxpayers do not realise they’ve left something out until they receive a notice or try to reconcile TDS with Form 26AS. Understanding the most frequent reasons can help you avoid repeating mistakes when correcting past returns or filing your next one.
- Using Foreign Or Decentralised Exchanges: Crypto trades done on non-Indian platforms often go unnoticed, as these platforms do not deduct TDS or issue transaction summaries in the required Indian tax format.
- Not Knowing Crypto Is Taxable: Many first-time investors assume crypto profits are not taxable or believe they fall under a grey area. This is no longer the case after the 2022 tax rules.
- Missing Out On TDS Data: The 1% TDS deducted on trades might show up in Form 26AS, alerting the tax department even if you forgot to report the associated gains.
- Filing Under The Wrong Income Head: Using the wrong ITR form or misclassifying crypto income as capital gains when it should be business income can create mismatches and scrutiny risk.
- Believing Only Realised Gains Are Taxable: Some users think that only converting crypto to INR is taxable. In fact, crypto-to-crypto swaps and spending crypto on goods or services also count as taxable events.
How to Report Missed Crypto Gains Using an Updated Return (ITR-U)?
If you forgot to report your crypto gains in a previous financial year, the Income Tax Department allows you to correct the mistake using an Updated Return (ITR-U) under Section 139(8A). Here is a clear step-by-step process to help you report your missed crypto income using ITR-U.
Step 1: Check If You’re Eligible to File ITR-U
Before starting, confirm that you are within the allowed window. You can file ITR-U within 2 years from the end of the relevant assessment year.
For example, if you missed reporting crypto gains for FY 2022–23 (AY 2023–24), you can file ITR-U until March 31, 2026.
However, ITR-U cannot be filed:
- If a refund is being claimed
- If a search, seizure, or assessment notice has already been issued for that year
- If you’re trying to revise a return that already declared the same income correctly
Step 2: Log in to the e-Filing Portal
Visit the Income Tax Wesbite and log in using your PAN/Aadhaar and password. Then navigate to:
e-File and select Income Tax Returns, and then File Income Tax Return. Now Select:
- Assessment Year for which the update is being made
- Mode of filing: Online
- Reason for filing ITR-U: “Income not reported correctly earlier”
Step 3: Choose the Correct ITR Form
The ITR-U must be filed alongside the applicable ITR form. For crypto gains:
Step 4: Fill in the ITR Form Along With ITR-U
Report the total crypto income that was missed earlier. Ensure that you:
- Add the missed crypto gains to the “Schedule VDA” in the ITR.
- Choose the correct head: Capital Gains or Business Income.
- You need to disclose each transaction or group of similar transactions by providing:
- Date of Acquisition: When you acquired the crypto
- Date of Transfer: When you sold, swapped, or spent it
- Type of Asset: For example, Bitcoin, Ethereum, NFT
- Sale Value: Total consideration received in INR
- Acquisition Cost: Only this can be deducted
- Platform Name: Exchange or wallet used
- Date of Acquisition: When you acquired the crypto
The ITR system auto-computes the taxable gain based on your entries.
- Attach supporting documentation if asked during the process
The ITR-U section will auto-calculate your tax, interest, and additional penalty.
Step 5: Pay the Additional Tax and Penalty
ITR-U filings require you to pay:
- Regular tax on the missed crypto gains
- Interest under Section 234B/234C, if applicable
Step 6: Submit the Return and Verify
After completing the form and payment, submit the return and verify it through Aadhaar OTP, net banking, or DSC. Once verified, keep a copy of the ITR-U and acknowledgement for your records.
Penalties for Filing ITR-U
While the Updated Return facility allows you to disclose missed crypto gains voluntarily, it comes at a cost. The Income Tax Department imposes an additional tax penalty on late reporting through ITR-U. The penalty amount depends on how long you wait after the end of the relevant assessment year. Acting early reduces your overall tax burden and shows good faith in correcting your mistakes
Time of Filing ITR-U | Additional Tax Penalty |
Within 12 months from the end of the relevant AY | 25% of total tax and interest payable |
Between 12 and 24 months from the end of the relevant AY | 50% of total tax and interest payable |
Example:
If your missed crypto gains resulted in a tax of INR 20,000 with INR 2,000 in interest, and you file within 12 months, you’ll pay INR 5,500 extra as penalty (25% of INR 22,000).
Waiting longer increases this to INR 11,000.
These penalties are in addition to your regular tax dues, and the ITR-U cannot be used to claim refunds or reclassify income for benefit. It is strictly for disclosing additional income.
How Can KoinX Help You Fix Missed Crypto Reporting?
Correcting missed crypto income manually can feel exhausting, especially when transactions span multiple exchanges or wallets. KoinX simplifies this process with automation, accuracy, and audit-ready tools tailored for Indian tax regulations. Here is how it helps you catch up on your past crypto reporting:
Auto-Syncs All Exchange Data in One Place
KoinX automatically fetches transaction data from 800+ exchanges, wallets, and blockchains. This eliminates the need to manually collect CSVs or logs from multiple platforms, reducing the chances of error and missed entries.
Highlights Unreported Gains Across Years
Its smart dashboard detects and flags income that hasn’t been reported in previous years. Whether it’s trades, staking, or NFT sales, KoinX scans your full transaction history to ensure nothing slips through the cracks.
Generates ITR-Compatible Reports and Schedule VDA
KoinX creates tax reports formatted for ITR-2, ITR-3, and the updated Schedule VDA. The data is already structured to match what the Income Tax Department asks for, saving you time and reducing filing mistakes.
Prepares You for Filing ITR-U Without Errors
If you’re filing an Updated Return, KoinX ensures all your figures reconcile with Form 26AS and reflect accurate gains, TDS, and acquisition costs. It also prepares you with all the supporting documents in case of a future notice.
If you’ve missed reporting crypto in your past returns, KoinX helps you fix it quickly and correctly. Sort your crypto tax notices with KoinX now and bring your tax filings up to date with zero hassle.
Conclusion
Missing out on crypto reporting in past years doesn’t have to put you at risk of scrutiny. The ITR-U framework gives you a clear opportunity to come clean and regularise your tax status. But to do this correctly, you must follow the steps carefully, starting from consolidating transactions to selecting the right ITR form and reconciling TDS entries.
If you’ve held or traded crypto in earlier financial years, now is the right time to fix those gaps. KoinX makes the entire process faster and safer. With automated reports and Schedule VDA-ready formats, it ensures your updated returns are fully compliant and audit-proof. So why wait? Schedule a Call with KoinX today and sort your crypto tax notices.
Frequently Asked Questions
Can I File an ITR-U for Multiple Years at Once?
No, you need to file a separate ITR-U for each assessment year. The system does not allow bulk submissions for multiple years. Each return must be filed individually with the respective disclosures.
Do I Need to Use ITR-2 or ITR-3 for Past Crypto Gains?
It depends on how you earned your crypto income. If you invested occasionally, use ITR-2. If you traded frequently or earned through mining or business activity, use ITR-3 to stay compliant.
What If My Exchange Didn’t Deduct TDS Earlier?
If TDS wasn’t deducted or reflected in Form 26AS, you should still report the full gain in your ITR. Be ready to show detailed records to support your claim if you are asked for clarification later.
Is Schedule VDA Mandatory in ITR-U?
Yes, Schedule VDA is mandatory if you’re reporting crypto income for financial years 2022–23 onwards. You must fill in all details, such as acquisition cost, sale value, and platform used, for each VDA transaction.
Can I Carry Forward Crypto Losses in the Updated Return?
No, crypto losses cannot be set off or carried forward under Section 115BBH. You still need to report them in Schedule VDA, but they offer no tax relief or adjustment.
