Get your crypto tax work done before March 31st, as even a small mistake could prove costly

You've earned money from crypto, but are you fully prepared for your taxes? The March 31st deadline is looming, and the calculations of 30% tax plus 1% TDS can be confusing. Learn how to report correctly and what experts advise to avoid hefty penalties.

The financial year ends on March 31st, making it time for crypto investors to streamline their virtual digital asset (VDA) reporting. India imposes a strict 30% flat tax and 1% TDS on crypto. To avoid last-minute rush and notices from the Income Tax Department, investors should account for all their transactions in advance.

Earning 30% and loss is yours

According to Mudrex CEO Edul Patel, investors should first calculate how much of their income is taxable. This includes trading profits, as well as income from staking rewards, mining, and airdrops. Keep in mind that crypto losses cannot be offset against other income. You can only deduct from your earnings the amount you used to purchase the crypto. Any other expenses beyond this are not eligible for deductions.

Choosing the right ITR form

It is crucial to maintain records of the 1% TDS deducted on every transaction. Investors should ensure that the TDS data shown in their exchange records and Form 26AS matches. Even the slightest discrepancy in the data risks an income tax investigation. Therefore, choose the appropriate form for your trading needs. ITR-2 is required for regular investors and ITR-3 for those who trade frequently.

Schedule VDA and Expert Tips

According to Sumit Gupta, co-founder of CoinDCX, reporting has become structured now that Schedule VDA is included in the ITR form, but the data must be accurate, as the investor is responsible for this. It's advisable to maintain a single accounting of all exchanges and wallets and have tax reports ready. It's wise to have documents ready in advance rather than rushing to the last minute.