Crypto Taxation In India For ITR Filing 2025-26: Indian investors are increasingly viewing cryptocurrencies as viable investment options. In times of high volatility in the stock market, they are shifting their funds to digital assets in hopes of achieving significant returns.
However, as the tax season is ongoing for ITR FY2025-26, crypto traders must report any income from the sale and profit of cryptocurrencies and other digital assets. Failure to do so can result in notices from the Income Tax Department, penalties, interest on unpaid taxes, and potential legal action.
In the Union Budget of 2022, the government officially categorised digital assets, including crypto assets, as Virtual Digital Assets. The outcome of this decision was that income from the transfer of virtual digital assets such as crypto and NFTs (non-fungible tokens) will be taxed at a flat rate of 30 per cent.
If crypto assets stored in your wallet are not mentioned while filing your tax return, the Income Tax Department may treat them as unexplained income under Section 69A. If you missed including cryptocurrency income in previous ITRs, file a revised return under Section 139(8A) before the deadline.
Crypto traders should prepare necessary documents, such as transaction history, wallet details, exchange reports, and TDS details, to avoid fines and further investigation by the Income Tax Department. The declaration of crypto earnings is crucial due to the ITR’s separate section under Section 2(47A), categorising them as “Virtual Digital Assets.”
In the Union Budget of 2022, the government officially recognised digital assets, including cryptocurrencies, as Virtual Digital Assets. Consequently, income from the transfer of these assets, such as crypto and NFTs (non-fungible tokens), is taxed at a flat rate of 30 per cent.
The tax rate, however, is not limited to only 30 per cent and there are other charges included in it as well. For example- if you have earned a profit of Rs 1,000 on the sale of a cryptocurrency amount, then post the deduction of 30 per cent tax, you will not get Rs 700. You will be subjected to a cess charge of 4 per cent and a 1 per cent tax deducted at source (TDS) which makes the total tax rate, i.e.- 35 per cent.
