How to Report Crypto Income in India: Your Complete 2024 Tax Guide

## Introduction
With cryptocurrency adoption surging in India, understanding how to report crypto income has become crucial for investors. Since the 2022 Union Budget introduced specific tax rules, failure to comply can lead to penalties. This guide breaks down India’s crypto tax framework step-by-step, helping you accurately declare earnings and avoid legal issues while maximizing compliance.

## How Cryptocurrency is Taxed in India
India treats virtual digital assets (VDAs) like cryptocurrency as taxable income under these key provisions:
– **30% Tax on Gains**: All profits from crypto transfers (sales, trades, exchanges) face a flat 30% tax, regardless of holding period
– **1% TDS Deduction**: Buyers must deduct 1% tax at source on transactions exceeding ₹10,000 per transaction (₹50,000 annually for specified persons)
– **No Loss Offset**: Crypto losses can’t be offset against other income types
– **Gift Tax**: Receiving crypto worth over ₹50,000 as gift incurs taxation under ‘Income from Other Sources’

## Types of Crypto Income and Tax Treatment
### Capital Gains from Trading/Selling
All profits from disposing of crypto are taxed at 30% + applicable cess. No distinction between short-term and long-term holdings.

### Mining and Staking Rewards
Income from mining or staking is taxable:
– Valued at fair market price when received
– Taxed as ‘Income from Other Sources’ at slab rates if done casually
– Considered business income if done professionally

### Airdrops and Hard Forks
Free crypto received via airdrops or forks is taxable:
– Treated as income at market value upon receipt
– Subject to 30% tax when later sold

### Crypto as Payment
Receiving crypto for goods/services:
– Taxed as business/professional income
– Value determined by crypto’s market price at transaction time

## Step-by-Step Guide to Reporting Crypto Income
1. **Calculate Total Gains**: Sum profits from all disposals using:
Sale Price – (Cost of Acquisition + Transaction Fees)
2. **Gather Documentation**:
– Exchange transaction history
– Wallet addresses
– Records of airdrops/mining rewards
– TDS certificates (Form 16E)
3. **File Correct ITR Form**:
– ITR-2: For capital gains and income from other sources
– ITR-3: If treating crypto as business income
4. **Report in Schedule VDA**:
Disclose all crypto gains in the new Virtual Digital Assets section
5. **Pay Outstanding Tax**:
Settle 30% tax liability + 4% cess before filing
6. **Account for TDS**:
Claim credit for any 1% TDS deducted from your transactions

## Record-Keeping Requirements
Maintain these records for 6 years:
– Dated transaction logs with rupee values
– Proof of cost acquisition (purchase receipts)
– Screenshots of exchange order books
– Mining pool payment statements
– Records of transferred assets between wallets

## Penalties for Non-Compliance
Failure to report crypto income may result in:
– 50-200% penalty on tax due
– Prosecution with possible imprisonment
– Interest charges at 1% monthly on unpaid tax
– Notice scrutiny from Income Tax Department

## Frequently Asked Questions

### Is cryptocurrency legal in India?
Yes, cryptocurrency is legal but unregulated. Trading and holding are permitted, but all transactions must comply with tax laws and anti-money laundering guidelines.

### Do I need to report crypto if I only hold it?
No. Taxation applies only when you sell, trade, spend, or earn crypto. Unrealized gains from holding aren’t taxable.

### How is cost basis calculated for multiple purchases?
Use First-In-First-Out (FIFO) method: The earliest acquired coins are considered sold first when calculating gains.

### Can I deduct crypto trading fees?
Yes. Transaction fees (exchange/gas fees) directly related to transfers can be deducted from sale proceeds when computing gains.

### What if I traded crypto for another crypto?
All crypto-to-crypto trades are taxable events. You must calculate gains in INR equivalent at transaction time and pay 30% tax.

### Are NFTs taxed like cryptocurrency?
Yes. Non-fungible tokens (NFTs) fall under the Virtual Digital Assets definition and follow identical tax rules.

## Conclusion
Accurate crypto tax reporting in India requires meticulous record-keeping and understanding of the 30% flat tax structure. Start organizing transaction histories early, use crypto tax calculators for complex portfolios, and consider consulting a CA specializing in digital assets. Staying compliant not only avoids penalties but establishes clear financial records as India’s crypto regulations evolve.