As the July 31 income tax filing deadline approaches, crypto investors, across India, are preparing to file their Income Tax Returns (ITRs). While many are familiar with the headline rules, actually filing crypto taxes can be far more complex. From crypto-to-crypto swaps and staking rewards to reporting transactions under Schedule VDA and claiming tax benefits, there are several nuances users need to know to remain compliant.
To make this process simpler, ZebPay has partnered with KoinX, a leading crypto tax platform, enabling users to seamlessly sync their transaction history, generate tax reports, and simplify their filing journey. In a conversation with Punit Agarwal, founder, KoinX, where he talks about the basics of crypto tax filing, how different crypto transactions are taxed, and how the ZebPay-KoinX partnership is making tax filing simpler for users (Edited Excerpts):
- Crypto taxes have been around for a few years now. Why do investors still find tax filing confusing?
While most investors know about the 30% tax on crypto gains and the 1% TDS, the confusion begins when they actually file their taxes. There are many different transaction types, such as crypto-to-crypto swaps, rewards, staking income, futures, and multiple exchanges, and each has different tax implications. The challenge isn’t knowing the headline rules; it’s understanding how they apply to real-world trading activity.
- What are the most important things crypto investors should know before filing taxes?
There are a few basics every investor should know:
- The 30% tax applies to taxable gains from Virtual Digital Assets (VDAs).
- 1% TDS is deducted on eligible transactions, but it isn’t your final tax liability.
- Every taxable crypto transaction must be reported under Schedule VDA in your ITR.
- The sale value shown on your AIS or Form 26AS isn’t your profit; it simply reflects your total sale transactions.
Many investors assume these figures represent taxable income, which often leads to incorrect filings.
- What are some of the biggest mistakes investors make while filing crypto taxes?
Some of the most common mistakes include:
- Confusing TDS with actual tax payable.
- Believing crypto-to-crypto swaps are tax free.
- Missing TDS credits while filing their ITR.
- Forgetting to report every taxable transaction in Schedule VDA.
- Assuming losses can offset profits (they generally cannot for spot crypto under current rules).
These errors can result in notices or unnecessary tax payments.
- If I swap one crypto asset for another (for example, ETH for USDT), have I triggered a tax event?
Yes. Many investors believe tax is only triggered when crypto is converted into INR, which’s correct. Under the current tax framework, transferring one crypto asset for another is also considered a taxable transfer. Every crypto-to-crypto swap needs to be evaluated for tax purposes.
- Can I offset losses from one crypto against profits from another?
No. Under the current VDA taxation rules, losses from one crypto transaction cannot be adjusted against gains from another transaction, even if they involve the same asset. Each profitable transaction is taxed independently, while losses generally cannot be set off.
- My exchange already deducted 1% TDS. Doesn’t that mean my taxes are already taken care of?
Not at all. TDS and income tax are 2 completely different filings. Think of TDS as an advance tax deposited, on your behalf. When you file your ITR, you calculate your actual tax liability and then adjust the TDS already paid. If excess TDS has been deducted, you may even be eligible for a refund.
- Many investors forget to claim TDS refunds. Is that common?
Extremely common. Many investors assume that once TDS has been deducted, there’s nothing more to do. In reality, unclaimed TDS can leave significant amounts of money with the government, simply because investors never file or reconcile their returns properly.
- How are airdrops, staking rewards, and referral rewards taxed?
Generally, these are treated in 2 stages. First, when you receive the crypto, its value may be taxed as income depends on your overall tax situation. Later, when you sell those tokens, any appreciation in value is taxed according to the applicable crypto tax rules. Receiving crypto for free doesn’t necessarily mean it’s free from tax.
- Are crypto futures taxed the same way as spot crypto?
No. Spot crypto and crypto futures are treated differently under the tax framework. While spot crypto falls under the VDA taxation rules, generally, crypto futures are treated differently for tax purposes, including how profits, losses, and brokerage expenses are considered. Investors, who actively trade futures, should understand these differences before filing their returns.
- How has the ZebPay-KoinX integration simplified tax filing? What happens after the tax report is generated?
Earlier, users had to download multiple reports manually, upload them to a tax platform, reconcile transactions, and calculate taxes themselves. With the integration, users can connect their account directly, automatically sync their transactions, calculate taxes in a few clicks, and generate reports ready for filing. This removes much of the manual work and reduces the chances of errors.
Users can either download the tax report and share it with their chartered accountant or choose to complete the filing through the platform itself. From transaction reconciliation to tax computation and filing, the objective is to simplify everything.
