How to Report Bitcoin Gains in India: Your Complete 2024 Tax Guide

Understanding Bitcoin Taxation in India

Since the 2022 Union Budget, Bitcoin and other cryptocurrencies are classified as Virtual Digital Assets (VDAs) under Indian tax law. All gains from selling, trading, or exchanging Bitcoin are taxable, regardless of holding period. The Income Tax Department mandates disclosure of these gains in your annual tax return (ITR). Failure to report can trigger penalties up to 50% of the tax due plus interest charges.

Types of Bitcoin Gains and Tax Rates

Indian tax law treats all Bitcoin gains uniformly:

• 30% Flat Tax Rate: Applies to all profits from Bitcoin transactions after deducting acquisition costs
• 4% Health & Education Cess: Additional surcharge on the tax amount
• No Indexation Benefit: Unlike stocks or real estate, you can’t adjust for inflation
• No Loss Offset: Bitcoin losses can’t be set against other income or carried forward

Step-by-Step Guide to Reporting Bitcoin Gains

1. Calculate Your Taxable Gain
   Formula: Sale Price – (Purchase Price + Transaction Fees). Maintain records of:
   • Date and value of each acquisition
   • Date and value of every disposal
   • Wallet addresses and exchange statements
2. File the Correct ITR Form
   • ITR-2: For individuals with capital gains (non-business transactions)
   • ITR-3: For traders filing as business income
3. Report Gains in Schedule VDA
   Disclose:
   • Gross proceeds from transfers
   • Cost of acquisition
   • Taxable gain amount
4. Pay Advance Tax
   If tax liability exceeds ₹10,000/year, pay in installments by:
   • 15th June (15%)
   • 15th Sept (45%)
   • 15th Dec (75%)
   • 15th March (100%)

Essential Record-Keeping Practices

• Preserve bank/UPI statements showing crypto transactions
• Download complete trade history from exchanges (CoinDCX, WazirX, etc.)
• Maintain screenshots of peer-to-peer transactions
• Retain records for 6 years from the assessment year

FAQs: Reporting Bitcoin Gains in India

1. Is Bitcoin mining income taxable?

Yes. Mined Bitcoin is taxed as income at fair market value upon receipt, plus 30% on gains when sold.

2. How is TDS applied to Bitcoin transactions?

A 1% TDS applies on transactions exceeding ₹50,000/year (for specified persons) or ₹10,000/transaction (others). Deducted at source by exchanges.

3. Do I pay tax if I transfer Bitcoin between my wallets?

No tax applies for transfers between your own wallets. Tax triggers only when selling for INR, trading for other crypto, or spending.

4. How are Bitcoin gifts taxed?

Gifts exceeding ₹50,000/year are taxable for recipients. When sold, capital gains tax applies based on original acquisition cost.

5. What if I traded on international exchanges?

You must still report gains in your Indian ITR. Convert foreign currency values to INR using RBI’s exchange rate on transaction dates.

6. Can I reduce taxes through donations?

Donating Bitcoin to registered charities qualifies for tax deduction under Section 80G. The deduction equals the fair market value at donation time.

Penalties for Non-Compliance

• ₹5,000 penalty for missing ITR filing deadline
• 0.5% monthly interest on unpaid tax
• 200% penalty for concealment of income
• Prosecution with imprisonment up to 7 years for severe evasion

Pro Tip: Use crypto tax software like Koinly or CoinTracker that auto-generates India-compliant tax reports using exchange API connections.

Always consult a chartered accountant specializing in crypto taxation for complex cases. With proper reporting, you avoid legal risks while participating in India’s digital asset revolution.