Learn how to report crypto to the Income Tax Department in your ITR-2 & how to pay tax on crypto in India in our simple step-by-step guide, including reporting crypto gains using the new Schedule VDA & reporting income from crypto. 🇮🇳
Want to understand how crypto is taxed in India first? Our expert reviewed India Crypto Tax Guide 2023 will get you up to speed fast with all the latest guidance from the ITD.
The Income Tax Department (ITD) is clear that all income earned from crypto is taxable as per the Income Tax Act. Not only this, but the ITD has been proactively issuing tax demand notices to negligent crypto investors.
In other words, it’s very important to report your crypto gains and income accurately and pay any taxes due to avoid future penalties. But due to a lack of legislative clarity on crypto tax from the ITD, many investors are unaware of how to calculate their crypto gains and income, nor which tax form they need to use to file and what details they need to include.
Don’t panic, we’ve got the answers to all your questions. Here’s our step-by-step guide on how to report crypto to the ITD and how to pay tax on crypto in less than 10 minutes!
Sign up and connect to a crypto tax calculator
The first step in filing your India crypto taxes is to sign up or log in to an India cryptocurrency tax calculator like Koinly and connect the exchanges, wallets, and blockchains you use. You can find out more about getting set up with Koinly in our help guide. Once you're connected, Koinly will calculate your gains, losses, income, and more.
Before downloading, make sure you've got the right settings for India in your Koinly setting, including the correct financial year, currency, and cost basis method.
Download your crypto tax report
Once you're connected and you have your figures, you'll need to download your report - so head over to the tax reports page to download your report. There are three reports you might need:
- Capital Gains Report (for capital gains and losses from disposals of crypto)
- Complete Tax Report (for income and expenses)
- Other Gains Report (for derivatives and other PnL products)
Of course, if you only have capital gains or losses, or only income, you'll only need the relevant reports. Once you have a paid Koinly plan, it's easy to download your report, just select the report you want to download under 'pick a report type' and hit 'download report'. You can download as many reports as you need to with a paid plan.
Once you have the correct reports, you can get started with reporting and filing your crypto taxes to the ITD. We'll be referring back to figures from these reports later.
This guide will cover filing the ITR-2 Form. This form is applicable to all taxpayers with capital gains except those with business income or taxpayers who are a partner in any firm. Taxpayers with business income need to use the ITR-3 Form instead.
Log into the Income Tax Portal and start your ITR-2
Your first step for reporting your crypto to the ITR is to log in to the Income Tax Portal. If you're filing a tax return for the first time, you'll need to register first (watch how to register).
Once you're logged in and on the home page, select e-file.
Now select Income Tax Returns, and then File Income Tax Returns
Next, select the assessment year as 2023-24 (Current AY for FY 2022-23).
Select the mode of filing as online and then continue.
Select start new filing. On the following page, select status as individual, and then select continue.
Under the heading I know which ITR Form I need to file, select ITR-2. Go to the next page and select let’s get started.
Enter your reason for filing an ITR. This will depend on your personal circumstances. Once you've completed this, select continue.
On the next page, under the select schedule heading, select income.
Scroll down and check the box next to schedule VDA, then select continue.
Before we proceed to the next steps on filing, let's take a quick look at examples of Koinly's reports. You can use the figures from your Koinly report(s) to fill out your ITR-2. Capital gains (including other gains) will be disclosed in Schedule VDA and Other Income will be disclosed in Schedule Income from Other Sources.
As we mentioned above, you may need the capital gains report, other gains report, and income summary section of the Complete Tax Report to report your crypto in your ITR, depending on your transactions. Here are examples of the reports:
1. Capital Gains Tax Report
2. Other Gains Tax Report
3. Complete Tax Report (Income and Expenses Summary)
Report your capital gains in Schedule VDA
Once you've selected Schedule VDA, on the following page, select add another.
On the next page, you'll need to fill out the following details to add each crypto trade to Schedule VDA (so you may need to repeat these steps multiple times to cover all your transactions).
You can find all the information you need in your Koinly Capital Gains Tax Report. We've added the column names Koinly uses in it's report in brackets, so it's to figure out what information goes where:
- Date of acquisition (Date acquired)
- Date of Transfer (Date sold)
- Head of Income (This asks whether you have capital gains or business income and will depend on your personal financial circumstances)
- Cost of Acquisition (Cost INR)
- Consideration received (Proceeds)
Once you've entered all your transactions with the relevant information, the Income Tax Portal will automatically calculate your profit and loss.
If you have other gains, for example PnL from derivatives, you'll need to report these in the Schedule VDA as well. You can use the figures from Koinly's Other Gains Tax Report to do this.
After you've entered all your trades, your Schedule VDA will appear like so.
Once you've checked your figures and you're happy with the information included in your Schedule VDA, select confirm to complete this section.
Report other income from crypto
On the schedules summary screen, select schedule income from other sources.
Now select gross income chargeable to tax at normal applicable rates and then add details.
For the nature of income, select any other income and then add.
On the next page, enter the nature of income as crypto income and enter the amount. You should use the total figure from the income summary section of your Koinly Complete Tax Report.
Complete your other required schedules
Once you've completed the schedules above, complete any other required scheduled and fill them in according to your income and deductions for the financial year, as applicable to your circumstances.
Proceed to verification
Your final step is to select proceed for verification. At this point, you can preview your completed ITR and submit once you're happy with it.
Once your ITR is submitted, you'll need to e-verify it. You can to this by requesting a OTP to the mobile number linked to your Aadhaar card.
Once your return is e-verified, your return is successfully filed - you're done! Once your ITR has been submitted, the ITD will let you know of any tax due on capital gains or income, how to pay, and when it's due - all available in your portal.
More questions about reporting and paying tax on your crypto in India? We have you covered!
How do I pay tax on crypto in India?
You pay tax on crypto by reporting your crypto as part of your ITR. Once you've reported your crypto, the ITD will inform you of any tax due, and your payment options, in your Income Tax Portal.
Wait, crypto is taxed in India?
Yes, your gains or income from crypto are very much taxable in India. You can learn everything you need to know in our India Crypto Tax Guide, which includes all the latest information from the Income Tax Department.
The information on this website is for general information only. It should not be taken as constituting professional advice from Koinly. Koinly is not a financial adviser or registered tax agent. You should consider seeking independent legal, financial, taxation, or other advice to check how the website information relates to your unique circumstances. Koinly is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this website.