Filing ITR for Crypto Traders and Investors in India (2025)
Introduction
With the rise of cryptocurrencies in India, tax authorities have become more vigilant than ever. The introduction of Section 115BBH and TDS under Section 194S has made it crucial for crypto investors and traders to file their Income Tax Returns (ITR) correctly.
If you are trading in Bitcoin, Ethereum, Dogecoin, or any other virtual digital asset (VDA), this 2025 guide by Makwana Sweta & Associates, trusted Chartered Accountants in Mumbai, explains everything you need to know.
Is Crypto Taxed in India?
Yes. As per the Union Budget 2022 (still valid in FY 2024–25), crypto assets are classified as Virtual Digital Assets (VDAs). The taxation is strict:
- Flat 30% tax on profits under Section 115BBH
- 1% TDS on transactions above ₹10,000 under Section 194S
- No deduction allowed except the cost of acquisition
- Losses cannot be set off against any income (even from other VDAs)
So, if you made profits from crypto in FY 2024–25, you are liable to pay tax and report them in your ITR.
Who Needs to File ITR for Crypto?
You must file an Income Tax Return (ITR) if:
- You earned any profit from crypto trading
- You received crypto as payment for goods/services
- You received airdrops, mined crypto, or earned staking rewards
- You are a freelancer, businessperson, or salaried individual with crypto transactions
Even if your income is below the taxable threshold, filing ITR ensures compliance and avoids scrutiny.
Which ITR Form to Use in 2025?
| Taxpayer Type | ITR Form |
|---|---|
| Salaried + Crypto Income | ITR-2 |
| Business income from crypto | ITR-3 |
| Presumptive business (Section 44AD) + crypto | ITR-4 (with caution) |
Most salaried individuals or investors should use ITR-2, while active traders must use ITR-3.
How to Classify Your Crypto Activity
1. Investor: If you buy-and-hold or occasionally sell – it’s treated as capital gains.
2. Trader: If you trade frequently – it’s treated as business income.
This classification impacts the applicable tax treatment and the ITR form to be used. If unsure, consult CA Sweta Makwana, offering CA services in Mumbai and PAN India.
Tax Filing Steps for Crypto Income
1. Gather Documents
- Crypto transaction history (from WazirX, CoinDCX, Binance, etc.)
- Bank statements showing INR transfers
- Screenshots or reports from crypto platforms
- Consolidated P&L statement from your exchange (if available)
2. Classify Transactions
- Buy/Sell trades
- P2P transfers
- Airdrops and mining rewards
- Conversion from crypto to crypto (also taxable!)
3. Calculate Taxable Income
- Income = Sale Price – Cost of Acquisition
- Losses cannot be deducted or carried forward
4. Pay Advance Tax
If your crypto gains exceed ₹10,000 tax in a year, you must pay advance tax in four instalments. Missing this can lead to interest under Sections 234B and 234C.
5. File ITR Online
- Log in to income tax portal
- Choose the correct ITR form
- Fill in VDA income in “Schedule VDA” section (added in 2023)
- Validate and submit with e-verification
TDS Compliance (Section 194S)
- From July 1, 2022, every buyer must deduct 1% TDS on crypto payments.
- Applicable even in crypto-to-crypto trades.
- Report TDS through Form 26Q or Form 16E.
If you are using an Indian exchange like CoinDCX or WazirX, they usually deduct TDS on your behalf. But it’s your responsibility to check and match it in Form 26AS.
Common Mistakes to Avoid
- Not reporting crypto-to-crypto transactions
- Claiming losses against crypto income
- Using the wrong ITR form
- Ignoring advance tax liability
- Not reconciling Form 26AS and GSTR-2B with your crypto activity
Real-World Example
Suppose you bought Bitcoin worth ₹1,00,000 in June 2024 and sold it for ₹1,50,000 in December 2024.
- Gain: ₹50,000
- Tax Payable: ₹15,000 (30% of 50,000)
- TDS Deducted: ₹1,500 (1% of sale value)
You still owe ₹13,500 in tax, which must be paid by the ITR due date.
Penalties for Non-Compliance
- Interest and penalty under Sections 234F, 234B, 234C
- Risk of IT scrutiny notices
- TDS default can attract Section 271H penalties
- IT department uses AI-based crypto transaction tracking now
Why Work with a Chartered Accountant?
Crypto tax compliance is evolving rapidly. A Chartered Accountant in Mumbai like Sweta Makwana ensures:
- Accurate calculation
- Correct form selection
- Advance tax planning
- Audit-proof documentation
Makwana Sweta & Associates, trusted Tax Consultants in Mumbai, provide comprehensive crypto taxation services PAN India.
Final Thoughts
With the crypto tax framework becoming stricter in India, it’s important to get your crypto ITR filing right. Start by organizing your trades, understanding tax rules, and ensuring compliance with the latest laws.
If you want peace of mind, reach out to Makwana Sweta & Associates, offering professional Chartered Accountant Services Mumbai and across India.
Useful Resources
For Tax and Complaince Services, Contact us at CA Makwana Sweta & Associates