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How to File ITR for Crypto Traders in India: A Step-by-Step Guide for Businesses

Navigating cryptocurrency taxation in India can be complex for traders. At Filingworld.in, we simplify ITR filing for Virtual Digital Assets (VDAs). This step-by-step guide helps you file accurately and compliantly.

Understanding Crypto Taxation in India

The Indian government taxes crypto (VDAs) at a flat 30% on gains from transfer, regardless of income slab. No deductions (other than cost of acquisition) or set-offs for losses are allowed. A 1% TDS is also applicable, which you can claim back during filing.

Essential Documents for Filing Your Crypto ITR

Gather these documents before you start:

  • Transaction History: Comprehensive data from all crypto exchanges (Indian and foreign).
  • Bank Statements: To reconcile crypto-related transactions.
  • Form 26AS/AIS: To verify 1% TDS deducted by exchanges.
  • PAN Card and Aadhaar Card.

Step-by-Step ITR Filing Process for Crypto Traders

Step 1: Calculate Your Gains or Losses

Identify all crypto transactions (buy/sell). Calculate gain (Sale Price - Cost of Acquisition) for each sale. Crypto losses cannot be set off against other income or carried forward.

Step 2: Choose the Correct ITR Form

For most crypto traders, you'll likely use:

  • ITR-2: If you're an individual/HUF with VDA income but no business/professional income.
  • ITR-3: If you have VDA income along with business or professional income.

Step 3: Report Income from VDAs in the ITR Form

Both ITR-2 and ITR-3 feature a "Schedule VDA." Report your Gross Sale Consideration and Cost of Acquisition for each VDA transaction. The system automatically calculates your profit and the 30% tax liability.

Step 4: Account for TDS (1%)

The 1% TDS deducted by exchanges will appear in Form 26AS. Enter this amount in the "TDS paid" section of your ITR. It will adjust against your tax liability.

Step 5: Verify and Submit Your ITR

After filling all details, verify your return via Aadhaar OTP, Net Banking, or by sending signed ITR-V. E-verify within 30 days!

Need Expert Help?

Crypto ITR filing can be intricate. Filingworld.in simplifies the process, ensuring accurate and compliant filing. Focus on your trades, we'll handle the taxes!

FAQs
As per Section 115BBH of the Income Tax Act, any income from the transfer of a Virtual Digital Asset (VDA) is taxed at a flat rate of 30%. This rate applies to both short-term and long-term gains, without any differentiation. This is in addition to a 4% cess.
No. A major constraint is that you can only deduct the cost of acquisition of the VDA. No other expenses, such as transaction fees, brokerage, or electricity costs for mining, can be claimed as a deduction. Furthermore, any losses from crypto transfers cannot be set off against any other income or carried forward to a future year.
For crypto traders, the income is generally considered "Profits and Gains of Business or Profession." Therefore, the correct ITR form to file is ITR-3. This form is specifically designed for individuals and HUFs with income from a business or profession. You cannot use ITR-1 or ITR-4. For other entities like LLPs, the form is ITR-5.
Schedule VDA is a specific section within the ITR forms (ITR-2 and ITR-3) that you must fill out to report your crypto transactions. This schedule requires you to provide transaction-level details, including the date of acquisition, date of transfer, cost of acquisition, and the sale consideration received.