How to File Crypto Taxes in India: A Step-by-Step Guide
Cryptocurrency investments in India are subject to taxation under the Virtual Digital Asset (VDA) framework. Whether you’re trading, staking, or receiving airdrops, understanding how to file crypto taxes correctly can help you stay compliant and avoid penalties.
This guide explains the online and offline filing methods, key tax rules, and common mistakes to avoid when reporting your crypto transactions.
Overview of taxation rules: Key tax slabs and applicable rates
Here’s an overview of Crypto Tax rules in India.
| Category | Tax Rate | Additional Rules |
| Crypto Profits (VDAs) | 30% flat tax | No deductions except cost of acquisition |
| Crypto Losses | Cannot be offset | Losses cannot be adjusted against gains or other income |
| TDS on Transactions | 1% (if above ₹50,000/₹10,000) | Deducted by Indian exchanges; self-reporting required for foreign exchanges |
| ITR Filing | ITR-2 or ITR-3 | Required to report all gains and losses |
How to Calculate Crypto Tax Liability
In India, crypto transactions are taxed under different categories, mainly profits, staking rewards, and airdrops.
1. Tax on Profits
If you sell crypto for a profit, it is treated as capital gains. A flat 30% tax applies to any profit made, plus a 4% cess. There is no deduction allowed for losses from other trades or expenses.
2. Tax on Staking Rewards
Earnings from staking are considered income and taxed based on your income tax slab rate. If you later sell the staked rewards, you must also pay a 30% tax on any capital gains from that sale.
3. Tax on Airdrops
Crypto received through airdrops is treated as a gift or income and taxed according to your income tax slab. If you sell the airdropped tokens, the 30% capital gains tax will also apply.
4. Capital Gains and TDS
- Capital Gains: If you buy and later sell crypto at a higher price, the difference is taxed at 30%.
- TDS (Tax Deducted at Source): A 1% TDS applies on all crypto sales above ₹50,000 (₹10,000 for some users). This is deducted at the time of the transaction and adjusted against total tax liability.
Want to learn more about how profits, staking, and airdrops are taxed? Check out our detailed guide here– Crypto Gifts and Airdrops Tax in India
File Crypto Taxes Online (E-Filing Method)
The most efficient way to file crypto taxes is through the Income Tax e-filing portal. Follow these steps:
Step 1: Log in to the Income Tax Portal
- Visit incometax.gov.in and log in using your PAN number and password.
Step 2: Choose the Right ITR Form
- If you are an individual investor, use ITR-2 (for capital gains) or ITR-3 (if trading frequently as a business).
Step 3: Report Crypto Gains and Losses
- Navigate to the “Income from Capital Gains” section and enter:
- Purchase price (cost of acquisition).
- Selling price and date of sale.
- TDS deducted (if any).
Step 4: Report Additional Crypto Income
- Staking rewards and airdrops should be added under the “Income from Other Sources” section.
Step 5: Pay Your Tax Dues
- After entering all details, the portal will calculate the total tax liability. Pay any remaining tax before submitting your return.
File Crypto Taxes Offline (Manual & Assisted Methods)
For those who prefer offline methods to file crypto taxes, these are the available options:
1. Traditional Process to File Crypto Tax
- Download the ITR form (ITR-2 or ITR-3) from the Income Tax Department’s website.
- Manually fill out the form with details of your crypto transactions.
- Submit the physical copy to the designated Income Tax office or send it via post.
2. Consulting Tax Professionals
If you have complex transactions, hiring a chartered accountant (CA) can ensure accuracy and compliance. CAs help with:
- Proper classification of crypto gains.
- TDS reporting for international transactions.
- Filing refunds if excess tax is paid.
3. Using Third-Party Services
Many fintech platforms offer crypto tax calculators that help compute tax liabilities and generate ITR reports automatically.
Common Mistakes & How to Avoid Tax Penalties
Avoid these errors to prevent penalties from the Income Tax Department:
- Not Reporting All Transactions – Even losses and airdrops need to be reported.
- Ignoring TDS Reporting – If trading on foreign exchanges, self-reporting of TDS is mandatory.
- Using the Wrong ITR Form – ITR-1 does NOT allow crypto reporting; use ITR-2 or ITR-3.
- Incorrect Tax Calculations – Manual errors can lead to notices and fines.
Best Practice: Use a crypto tax calculator to automate calculations and ensure accurate filing.
Conclusion
Filing crypto taxes doesn’t have to be a headache. The Mudrex Crypto Tax Calculator makes it simple, fast, and accurate.
- Know your tax in seconds – Just enter your total sales and investment amount. The calculator does the math and tells you exactly what you owe.
- No mistakes, no stress – Avoid manual errors and let the tool handle the calculations for you.
- Completely free – No hidden fees, no complex steps. Anyone can use it to stay tax-compliant.
Try it now 
Mudrex Crypto Tax Calculator
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FAQs
How to avoid 30% crypto tax in India?
There is no legal way to avoid the 30% tax on crypto profits. However, you can reduce your tax burden by optimizing your transactions and keeping track of expenses like acquisition costs.
How much crypto is tax-free in India?
There is no tax exemption limit for crypto transactions. All gains, no matter how small, are taxed at 30%.
How do you declare crypto taxes?
Crypto gains should be reported in ITR-2 (for capital gains) or ITR-3 (if actively trading). TDS must also be self-reported for transactions on foreign exchanges.
Is 1% TDS on crypto refundable?
Yes, if your total tax liability is lower than the TDS deducted, you can claim a refund while filing your ITR.
