Schedule VDA Guide 2026: Field-by-Field ITR Filing Workflow for Crypto and Other VDAs

Last updated: 2026
Author: EDITORIAL TEAM

Affiliate disclosure: This guide may contain links to third-party tax software, record-keeping services or professional platforms. We may receive a commission if a reader uses an affiliate link, at no additional cost to the reader. Commercial relationships do not determine the tax explanations, warnings or filing recommendations presented here.

Important tax disclaimer: This article provides general educational information for Indian taxpayers. It is not personal tax, accounting or legal advice. Virtual digital asset transactions can involve unsettled or fact-dependent issues. Consult a Chartered Accountant with relevant VDA experience before filing if your records include DeFi activity, mining, staking, airdrops, gifts, NFTs, offshore exchanges, foreign wallets, business-style trading or missing acquisition data.

Schedule VDA is the part of an Indian Income Tax Return used to report income arising from the transfer of virtual digital assets. It is not simply a box where you enter your total crypto profit for the year. The current official guidance requires transaction-wise information, including acquisition and transfer dates, cost of acquisition, consideration received and the resulting income from each transfer.

For taxpayers filing income earned during Financial Year 2025-26, the relevant return is for Assessment Year 2026-27. That return continues to be governed by the Income-tax Act, 1961, even though the Income-tax Act, 2025 came into force from 1 April 2026. Transactions occurring from 1 April 2026 belong to the new tax-year framework and will generally form part of the return filed in 2027, not the AY 2026-27 return.

This distinction matters. A taxpayer preparing an AY 2026-27 return should not mix April 2026 transactions into the ledger for FY 2025-26. The first control in any Schedule VDA workflow is therefore the reporting period: include transactions from 1 April 2025 through 31 March 2026 for AY 2026-27.

Quick Answer: How Do You Fill Schedule VDA?

A reliable Schedule VDA filing process has five stages:

1. Collect complete transaction records from every exchange, wallet, bank account and peer-to-peer platform used during the financial year.
2. Build one master ledger in Indian rupees.
3. Identify each transfer and calculate its consideration, cost of acquisition and positive income.
4. Reconcile the ledger with the Annual Information Statement, Taxpayer Information Summary and Form 26AS.
5. Enter the required transaction-wise details into the applicable ITR utility and review how the positive VDA income flows into the tax computation.

The Income Tax Department’s 2026 Schedule VDA guidance states that the schedule requires detailed transaction-wise information for every VDA transfer. It also states that where a transaction produces a loss, the amount is reported as nil for Schedule VDA aggregation, while the positive amounts are carried to the relevant ITR schedule.

Do not begin by copying an exchange’s displayed “net profit” into the return. Exchange profit reports may use accounting assumptions, group transactions differently, deduct fees that may not be deductible under the special VDA rules or omit activity conducted outside that platform.

The safer workflow is to reconstruct the underlying transfers first and use the exchange report only as one supporting record.

What Is Schedule VDA?

Schedule VDA reports income arising from the transfer of a virtual digital asset. The official definition of a VDA can cover crypto assets, certain non-fungible tokens and other notified digital assets. Indian currency, foreign currency, central bank digital currency and specifically excluded digital assets do not fall within the same definition.

The word transfer is important. Schedule VDA is concerned with a disposal or transfer event, not merely the fact that you held an asset during the year.

Common events that may involve a transfer include:

• Selling crypto for Indian rupees
• Selling crypto for another fiat currency
• Swapping one crypto asset for another
• Using crypto to pay for goods or services
• Transferring a VDA as a taxable gift
• Selling or transferring a covered NFT
• Disposing of tokens received through staking, mining or an airdrop
• Exchanging tokens through a decentralised protocol
• Redeeming, burning or converting a token where ownership or rights are surrendered

A movement between two wallets that you beneficially own is not automatically the same as a sale. However, blockchain records alone may not clearly establish whether a transaction was a self-transfer, bridge, swap, liquidity-pool deposit or disposal. Each wallet movement should therefore be labelled according to its real economic purpose.

Who Needs to Complete Schedule VDA?

A taxpayer should review Schedule VDA if they transferred a covered virtual digital asset during the relevant financial year and the resulting income must be reported in an Indian return.

The official Schedule VDA guidance lists the schedule as applicable to ITR-2, ITR-3, ITR-5, ITR-6 and ITR-7. It is not listed as a schedule in ITR-1 or ITR-4.

For an individual or Hindu Undivided Family, the practical choice is commonly between ITR-2 and ITR-3:

Taxpayer situation	Form generally considered
VDA held as an investment and no business or professional income	ITR-2
VDA activity treated as business income, or taxpayer otherwise has business/professional income	ITR-3
Company, partnership, trust or another entity	Entity-specific return containing Schedule VDA

ITR-2 is intended for individuals and HUFs that do not have income chargeable under profits and gains of business or profession. ITR-3 is intended for individuals and HUFs with business or professional income.

The number of trades alone does not provide a universal test for deciding whether VDA activity is investment or business activity. Frequency, organisation, intention, source of funds, accounting treatment, holding pattern and the taxpayer’s overall conduct may all matter. A person with substantial or systematic trading should obtain advice before selecting the return and head of income.

Do not choose ITR-2 merely because it appears shorter. Equally, do not classify occasional investing as a business only because the exchange statement contains many order executions.

The Core VDA Tax Rules for AY 2026-27

Section 115BBH imposes a special 30% tax rate on income from the transfer of a VDA. Applicable surcharge and health and education cess may be added to the resulting tax.

The 30% rate applies to the taxable income from the transfer, not automatically to the entire sale value. The starting calculation is generally:

Consideration received − allowable cost of acquisition = income from the transfer

Section 115BBH also restricts deductions. It permits the cost of acquisition, if any, but does not allow other expenditure, allowances or the set-off of VDA transfer losses. A VDA transfer loss also cannot be carried forward to a later assessment year.

This creates three consequences that surprise many taxpayers.

1. TDS Is Not the Final Crypto Tax

Section 194S generally requires tax to be deducted at 1% of the consideration paid to a resident for the transfer of a VDA, subject to the applicable thresholds and other conditions. The TDS is connected to the consideration, while the final Section 115BBH tax is based on taxable VDA income.

A ₹5,000 TDS credit does not mean the final tax liability is ₹5,000. The TDS is an advance tax credit that must be matched with the taxpayer’s records and Form 26AS.

2. One Losing Trade Does Not Necessarily Reduce Another Winning Trade

Suppose a taxpayer has:

• ₹1,20,000 income from a BTC transfer
• ₹80,000 loss from an ETH transfer

Schedule VDA does not simply produce a net taxable amount of ₹40,000. The official schedule guidance states that a loss from a transaction is reported as nil and positive transaction amounts are aggregated. Section 115BBH separately prohibits the set-off and carry-forward of VDA transfer losses.

The positive ₹1,20,000 may therefore remain the relevant VDA income for the special-rate calculation, subject to the taxpayer’s complete facts and the operation of the current utility.

3. Ordinary Trading Expenses Cannot Automatically Be Deducted

Exchange charges, platform commissions, wallet fees, software subscriptions, interest, internet expenses, hardware costs and professional fees should not be placed in the cost-of-acquisition field merely because they relate to crypto activity.

The law permits only the cost of acquisition, if any, as the deduction under the special VDA computation. Whether a particular payment is legally part of acquiring the asset, rather than a separate expense, can be fact-dependent. Keep it separately identified and obtain professional advice if the treatment affects the return materially.

Step 1: Fix the Correct Financial Year

Before downloading reports, establish the date range.

For AY 2026-27, prepare records for:

1 April 2025 to 31 March 2026

Do not include a sale made on 2 April 2026 merely because you are preparing the return in July 2026. That sale belongs to the next reporting period.

Also review transactions executed near midnight or through international platforms. An exchange may display timestamps in UTC rather than Indian Standard Time. A transaction shown as 31 March in one report may appear as 1 April after timezone conversion.

Use a consistent timezone policy and preserve the raw timestamp. If a boundary transaction could move between financial years depending on the timezone, document the exchange timezone and ask a tax professional which date is defensible for the return.

Step 2: Create a Complete Platform Inventory

Taxpayers often start with their main Indian exchange and forget activity elsewhere. Build an inventory before calculating anything.

Include:

• Indian centralised exchanges
• Foreign or offshore exchanges
• Decentralised exchanges
• Browser and mobile wallets
• Hardware wallets
• Custodial earning or lending platforms
• NFT marketplaces
• Gaming or metaverse wallets
• Peer-to-peer marketplaces
• Bank and UPI accounts used for P2P settlements
• Payment accounts used to buy or sell crypto
• Blockchain addresses under your control
• Accounts closed during the year
• Exchanges that stopped operating or restricted withdrawals

A platform with no year-end balance may still contain taxable transfers. Similarly, a wallet created only to receive an airdrop may later have been used in a swap.

Create a simple control sheet with the platform name, account email, user ID, available report, report period, wallet addresses and whether the data has been downloaded. This inventory becomes the completeness checklist for the return.

Step 3: Download the Source Records

Obtain original data rather than relying on screenshots of balances.

Centralised exchanges

Download, where available:

• Complete order history
• Trade history
• Buy and sell history
• Deposit history
• Withdrawal history
• Crypto conversion or swap history
• P2P order history
• Earn or staking statements
• Reward and referral statements
• Tax or TDS reports
• INR deposit and withdrawal reports
• Account statements covering the full financial year

Check whether the report uses trade time, settlement time or export time. Also verify whether the value column is gross or net of fees.

Self-custody wallets and DEX activity

Export transaction history for every relevant blockchain address. Preserve:

• Transaction hash
• Block timestamp
• Sending and receiving addresses
• Token contract address
• Token quantity
• Network fee
• Protocol used
• INR valuation source
• Notes explaining the transaction

A block explorer may show the token movement but not the economic purpose. Label whether the record was a swap, bridge, self-transfer, liquidity transaction, reward receipt or disposal.

P2P transactions

Keep:

• Platform order record
• Counterparty reference
• Bank or UPI entry
• Crypto quantity
• Exchange rate
• Gross consideration
• TDS details, where applicable
• Date and time
• Proof of release from escrow

A bank credit alone does not show which token was sold or the original acquisition cost. Link each bank entry to the corresponding crypto order.

NFTs

Preserve the token ID, contract address, marketplace record, acquisition payment, royalty or platform charges, transfer hash and sale consideration. Not every item marketed as an NFT necessarily produces the same tax analysis, so retain enough information to identify the rights represented by the token.

Step 4: Build a Master VDA Ledger

The master ledger should combine every source into one consistent table.

A useful structure is:

Field	What to record
Transaction ID	Your internal row number
Platform	Exchange, wallet or marketplace
Transaction hash/order ID	Verifiable source reference
Asset	BTC, ETH, USDT, token name or NFT identifier
Contract address	Particularly useful for tokens with similar names
Transaction type	Buy, sell, swap, gift, reward, bridge, self-transfer
Acquisition date	Date the disposed asset was acquired
Transfer date	Date of sale, swap or other disposal
Quantity transferred	Units disposed of
Gross consideration	INR value received before TDS
Cost of acquisition	Supported acquisition cost attributed to disposed units
Other fees	Tracked separately, not automatically deducted
Positive income	Consideration minus supported acquisition cost
TDS deducted	Amount under Section 194S
Deductor/platform	Source of TDS credit
AIS match	Matched, unmatched or disputed
26AS match	Credit found, missing or different
Evidence location	File name, folder or document reference
Review flag	Missing cost, complex case, foreign asset or other issue

Do not delete losing transactions from the ledger. They remain necessary to explain the movement of assets, reconcile exchange totals and support the calculation even though the loss may not reduce positive VDA income.

Step 5: Separate Acquisitions, Transfers and Self-Movements

The master ledger should distinguish three broad categories.

Acquisition without disposal

Buying BTC with INR is ordinarily an acquisition record. It establishes quantity, acquisition date and potential cost for a later transfer.

Transfer or disposal

Selling BTC for INR, swapping BTC for ETH or using BTC to purchase an item may involve a transfer of BTC. The transaction must be reviewed for Schedule VDA reporting.

Movement without change in ownership

Moving BTC from your exchange account to your own hardware wallet may be a self-transfer rather than a disposal. The movement should still be retained because it links the exchange withdrawal to the wallet receipt.

Do not treat all withdrawals as sales. Conversely, do not treat every wallet-to-wallet transaction as a harmless self-transfer. Confirm whether the destination wallet was yours and whether the transaction involved a protocol that changed the asset or surrendered rights.

Step 6: Select an Acquisition-Lot Matching Approach

A taxpayer who bought the same token on multiple dates must identify which acquisition cost relates to the units later transferred.

Example:

• 1 ETH bought for ₹1,50,000
• 1 ETH bought later for ₹2,10,000
• 1 ETH subsequently sold for ₹2,40,000

The calculated income changes depending on which unit is treated as sold.

Some taxpayers and software tools use FIFO, under which the earliest acquired units are treated as disposed of first. However, the special VDA provisions do not provide a simple universal statement that FIFO is mandatory for every taxpayer and every kind of token transaction.

Use a consistent and supportable approach that fits your facts, records and accounting position. Do not switch between FIFO, specific identification and average cost only to minimise tax on individual trades. For material holdings, obtain written advice and preserve the lot-matching calculation.

Step 7: Convert Every Relevant Amount to INR

Schedule VDA reporting requires rupee values. Straight INR trades are usually easier, but offshore and on-chain activity may require valuation.

Crypto sold for INR

Use the gross INR sale consideration before TDS. Do not enter only the net amount credited to the bank.

Crypto-to-crypto swap

If one token is exchanged for another, determine the INR fair value of the consideration received at the transfer time.

For example, if 0.1 BTC is swapped for 1.8 ETH, the disposal side is the transfer of 0.1 BTC. The INR value of the ETH received is relevant to measuring the BTC consideration. The ETH received also creates a new acquisition record for future tracking.

Section 194S specifically contemplates consideration paid wholly in kind, in exchange for another VDA or partly in cash and partly in kind.

Purchase of goods or services

Record the defensible INR value of what was received in exchange for the VDA.

Offshore exchange trade

Use a consistent conversion process. Where the platform reports a USD value, record the USD amount, the INR conversion rate, the rate source, timestamp and calculated INR amount.

Thinly traded token

Do not invent a price from an unrelated exchange. Preserve available market data and flag the transaction if the valuation could materially affect tax.

Consistency does not guarantee that a method is legally correct, but inconsistency makes a return harder to defend. Create a valuation note explaining the price source, timestamp and currency-conversion convention used.

Step 8: Calculate Income Transaction by Transaction

For each transfer:

Gross consideration received
minus supported cost of acquisition
equals transaction income

If the result is positive, it contributes to positive VDA income.

If the result is negative, keep the economic loss in the master ledger, but follow the current Schedule VDA utility’s treatment. The official 2026 guidance says a loss is reported as nil and positive amounts are aggregated.

Example 1: Sale for INR

• BTC acquisition cost: ₹3,00,000
• Gross sale consideration: ₹4,50,000
• TDS deducted: ₹4,500
• Amount credited after TDS: ₹4,45,500

Schedule VDA consideration is based on the gross ₹4,50,000, not the ₹4,45,500 bank credit.

Transaction income:

₹4,50,000 − ₹3,00,000 = ₹1,50,000

Tax at 30% before surcharge and cess:

₹45,000

The ₹4,500 TDS may be available as a credit if correctly reported and reflected in the relevant tax records. It is not substituted for the full tax computation.

Example 2: Crypto-to-crypto swap

• Cost of transferred SOL: ₹70,000
• INR value of ETH received: ₹1,05,000

Income from SOL transfer:

₹1,05,000 − ₹70,000 = ₹35,000

The ETH received must be entered in the taxpayer’s private ledger as a new acquisition. Preserve the valuation used for both sides of the transaction.

Example 3: Loss-making transfer

• Cost of token: ₹90,000
• Consideration received: ₹55,000
• Economic loss: ₹35,000

The loss should remain in the supporting ledger. Under the special VDA rules, it cannot be set off or carried forward, and the current official schedule guidance indicates that the loss is reported as nil for aggregation.

Example 4: Sale with missing acquisition record

• Consideration received: ₹2,00,000
• Claimed cost: ₹1,40,000
• Exchange statement unavailable

Do not enter ₹1,40,000 merely because that is your recollection. Search bank records, old emails, wallet history, order confirmations and blockchain data.

If the cost cannot be substantiated, obtain advice before claiming it. An unsupported deduction can be challenged. The absence of data does not justify creating a convenient estimate.

Schedule VDA Field-by-Field Guide

The exact display can differ between the online portal, Excel utility, JSON utility and third-party filing software. Always follow the live AY 2026-27 utility rather than an old screenshot.

The Income Tax Department’s current guidance identifies the core transaction-wise details as serial number, acquisition date, transfer date, relevant head, cost of acquisition, consideration received and resulting income.

Field 1: Serial Number

Use a unique sequential number for each reportable transaction row.

Maintain the same number in your master ledger. If the tax department or your CA later asks about row 117, you should be able to retrieve the exact exchange order, wallet transaction and calculation behind it.

Do not assume that hundreds of trades may be combined into one annual row. Current official guidance describes the disclosure as transaction-wise for every transfer.

Where software imports or groups entries, verify that the output complies with the current utility and preserve a transaction-level supporting file.

Field 2: Date of Acquisition

Enter the acquisition date of the specific units being transferred.

The date may come from:

• Exchange purchase history
• Earlier crypto swap
• Gift or inheritance documentation
• Reward receipt
• NFT mint or purchase
• Wallet acquisition record

Where assets were acquired in multiple lots, the acquisition date depends on the supported lot-identification approach.

Do not automatically use the date on which the asset was deposited into the selling exchange. A deposit may only be a movement from another wallet and may not be the original acquisition.

Field 3: Date of Transfer

Enter the date on which the disposal or transfer occurred.

Use the transaction execution record where available. Do not substitute the bank settlement date merely because the INR withdrawal arrived later.

For on-chain transfers, retain the block timestamp and the timezone conversion applied.

For crypto-to-crypto transactions, use the date on which the transferred asset was exchanged, not the date on which the replacement asset was later sold.

Field 4: Head or Classification of Income

For a typical investor using ITR-2, Schedule VDA information is generally associated with capital-gains reporting. The official Schedule VDA guidance describes the head as capital gains, and the ITR-2 manual confirms that Schedule VDA is included in ITR-2 and feeds into the relevant computation.

A taxpayer whose VDA activity forms part of a business, or who otherwise has business or professional income, may need ITR-3 and the related business schedules.

This is not a field to select casually. Misclassification can affect the return form, books, audit considerations and other schedules. Seek professional advice when activity is frequent, organised or commercially structured.

Field 5: Cost of Acquisition

Enter the supported cost attributed to the asset transferred.

The cost should be traceable to:

• Original INR purchase
• INR value used in an earlier crypto-to-crypto acquisition
• Applicable previous-owner cost in a qualifying gift or inheritance case
• Another legally supportable acquisition basis

Section 115BBH permits cost of acquisition, if any, while prohibiting other expenditure or allowances.

Do not automatically include:

• Sale commissions
• General exchange charges
• Withdrawal charges
• Wallet subscriptions
• Tax-software costs
• Interest on borrowed funds
• Internet or electricity costs
• Hardware-wallet purchases
• Advisory or return-filing fees

Track such amounts separately. Where an acquisition-specific payment may arguably form part of the asset’s acquisition cost, obtain professional advice rather than forcing it into the field.

Field 6: Consideration Received

Enter the gross INR value received or receivable from the transfer.

Examples include:

• Gross INR sale amount before TDS
• INR value of the crypto received in a swap
• INR value of goods or services received
• Sale value of an NFT
• Value received from redeeming or disposing of a token

Do not enter only the net bank receipt if TDS or platform charges were deducted from the proceeds.

Field 7: Income from Transfer

The utility calculates or captures the difference between consideration and cost of acquisition.

Where the result is negative, follow the current form validation. The department’s current guidance states that a loss is reported as nil and positive transaction amounts are carried forward for the relevant computation.

Review the total carefully. A software import that nets all profits and losses before populating Schedule VDA may understate taxable positive income.

How to Reconcile Schedule VDA with AIS, TIS and Form 26AS

Reconciliation is not the same as copying AIS into the return.

The Annual Information Statement gives a broader view of taxpayer information and allows feedback on reported entries. The Taxpayer Information Summary presents aggregated information. Form 26AS primarily displays TDS and TCS information from AY 2023-24 onwards.

Your own complete ledger remains the starting point because not every self-custody, offshore or decentralised transaction will necessarily appear in the same way—or at all—in the department’s information systems.

Reconciliation Step 1: Download AIS

Log in to the e-filing portal and open the Annual Information Statement section.

Download the detailed statement and identify entries connected with:

• VDA transfers
• Section 194S
• Exchanges or counterparties
• High-value receipts
• Other information that may relate to crypto activity

Do not review only the total. Examine the information source, date, description and reported value.

Reconciliation Step 2: Download TIS

The Taxpayer Information Summary can help identify aggregated amounts associated with an information category.

Use it as a control total, but do not assume the TIS figure equals taxable VDA income. A reported transaction value may represent consideration or activity volume rather than profit.

Reconciliation Step 3: Download Form 26AS

Check whether Section 194S TDS deducted during FY 2025-26 appears in Form 26AS.

Record:

• Deductor
• Amount paid or credited
• TDS amount
• Date or quarter
• Any mismatch with the exchange tax report

Form 26AS is the core tax-credit record. AIS may display broader information, while 26AS focuses on TDS/TCS data.

Reconciliation Step 4: Match the Master Ledger

For every AIS or TDS entry, find the related transaction in your ledger.

Match using:

• Date
• Exchange or deductor
• Asset
• Gross consideration
• Order ID
• TDS amount
• Bank receipt
• Transaction hash

Mark the entry as:

• Exact match
• Timing difference
• Value difference
• Duplicate
• Unknown
• Reported by you but absent from AIS
• Reported in AIS but absent from your records

Reconciliation Step 5: Investigate Differences

Do not change a correct ledger merely to force it to equal an unexplained AIS total.

Investigate whether the difference arose from:

• Gross versus net reporting
• TDS deducted from the payout
• UTC versus IST date
• Duplicate platform reporting
• Cancelled or reversed order
• Crypto-to-crypto valuation
• P2P counterparty reporting
• Incorrect PAN
• Exchange reporting error
• Missing transaction history
• Activity on another account
• Transaction occurring outside the financial year

AIS allows taxpayers to submit feedback on information. Use the available feedback process where an entry is inaccurate, duplicated or belongs to another person, while retaining evidence supporting the response.

Reconciliation Step 6: Deal with Missing TDS Credit

If an exchange or counterparty deducted TDS but the credit is absent or incorrect in Form 26AS:

1. Verify the PAN supplied to the deductor.
2. Confirm the deduction appears in the exchange tax statement.
3. Check whether it was reported in the correct financial year and quarter.
4. Contact the deductor’s compliance or tax support team.
5. Request correction of the relevant TDS statement where necessary.
6. Retain correspondence and proof of deduction.
7. Obtain advice before claiming a credit that the department’s records do not support.

A tax-credit mismatch can lead to an adjustment or demand even where the economic transaction itself was reported correctly.

Understanding the 1% TDS Rule

Section 194S provides for 1% TDS on consideration paid to a resident for the transfer of a VDA.

The general annual thresholds are:

• ₹50,000 where the payer is a “specified person”
• ₹10,000 for other payers

The specified-person definition includes certain individuals or HUFs without business or professional income and individuals or HUFs whose preceding-year business or professional turnover remains within the stated limits.

The threshold determines whether TDS is required under Section 194S. It does not create an equivalent exemption from reporting taxable VDA income.

A transaction can still produce taxable income even where no TDS was deducted because the threshold was not crossed, the platform was offshore, the counterparty failed to comply or the transaction was not captured by an intermediary.

For FY 2025-26 transactions, the old Act and applicable forms continue to govern the TDS process. The government’s transition guidance states that events occurring on or before 31 March 2026 remain under the earlier framework, while events from 1 April 2026 move to the new Act’s TDS framework.

Complex Cases That Should Not Be Forced into a Simple Template

Staking rewards

Staking can describe several different arrangements:

• Native proof-of-stake rewards
• Exchange staking
• Liquid staking tokens
• Delegation rewards
• Protocol incentives
• Rebase tokens
• Validator income

Do not assume every staking receipt is automatically a “gift” or is taxed under one identical provision.

Questions may include whether income arises at receipt, how fair market value is measured, whether the activity is business income or other-source income and what becomes the cost when the reward token is later transferred.

Schedule VDA becomes relevant when the covered reward token is later transferred, but the receipt-stage treatment must also be considered. Obtain professional advice where the value is material.

Airdrops

An airdrop may be:

• A promotional distribution
• A governance-token allocation
• Compensation for prior activity
• A reward for holding another token
• A distribution following a fork
• A token received without requesting it

The tax treatment can depend on the rights received, whether a market existed, whether the receipt is a gift, whether services were provided and whether the taxpayer could control or dispose of the token.

The gift provisions can include VDAs within specified movable property and may tax certain receipts exceeding the applicable threshold, subject to exemptions and detailed conditions.

Do not automatically set the cost to zero or fair market value without reviewing how the receipt was taxed.

Gifts and inherited VDAs

For a genuine gift, first consider whether the receipt itself is taxable under the gift provisions and whether an exemption applies, such as a qualifying receipt from a relative.

When the recipient later transfers the asset, cost-of-acquisition rules may refer to the previous owner’s cost in qualifying gift or inheritance situations. Section 49 contains previous-owner cost rules for assets acquired under a gift, will, succession or inheritance.

Preserve:

• Donor details
• Relationship
• Gift documentation
• Date and quantity
• Donor’s acquisition records
• Wallet transaction
• Fair market value at receipt
• Any tax treatment applied at receipt

A recipient who cannot obtain the donor’s acquisition records should not invent the cost.

Mining income

Mining may involve business operations, equipment, electricity, pool payments and self-generated tokens.

Section 115BBH allows only cost of acquisition in computing transfer income, but the appropriate cost treatment for mined assets can raise difficult questions. Business-income recognition at receipt, later Schedule VDA reporting and the treatment of operational expenses should be reviewed together.

A mining operation should not be handled by copying an ordinary retail-investor example.

DeFi lending and liquidity pools

Depositing assets into a liquidity pool can produce:

• Liquidity-provider tokens
• Trading-fee rewards
• Incentive tokens
• Interest-like receipts
• Impermanent loss
• Multiple token withdrawals
• Protocol migrations

The legal and tax character can depend on whether beneficial ownership changed, whether one asset was exchanged for another and when income became measurable.

Do not treat the final wallet withdrawal as the only transaction without analysing the intermediate steps.

Token bridges and wrapped assets

A bridge may lock one token and issue a wrapped representation on another chain. Whether a particular bridge creates a taxable transfer can depend on the mechanism and the rights retained.

Preserve the source-chain transaction, destination-chain receipt, bridge documentation and evidence that the same economic ownership continued.

NFTs

NFT cases may involve:

• Purchase and resale
• Creator royalties
• Minting
• Gaming assets
• Membership rights
• Fractional interests
• Commercial intellectual-property rights
• Tokens bundled with physical assets

Do not assume that every NFT has the same tax treatment merely because it uses a blockchain.

Lost, stolen or inaccessible assets

Losing a private key, suffering a hack or being unable to withdraw from an insolvent exchange does not automatically create an allowable Schedule VDA loss.

There may be no transfer, no consideration and no straightforward deduction under Section 115BBH. Preserve police reports, exchange communications, wallet evidence and insolvency documents, and obtain advice before deciding whether any disclosure is required.

Offshore exchanges and foreign wallets

Using a foreign exchange can create issues beyond Schedule VDA, including residential-status questions, foreign-source income, foreign-asset reporting and exchange-rate evidence.

Do not assume that an offshore transaction is excluded merely because no Indian exchange reported it in AIS. The taxpayer’s reporting duty is not limited to entries already visible on the portal.

The Finance Act 2025 also introduced a crypto-asset transaction reporting provision for prescribed reporting entities from 1 April 2026, reflecting an expansion in information reporting around crypto assets.

Business-style or high-volume activity

A person trading full-time, using borrowed capital, maintaining an organised trading operation or offering VDA-related services may have business-income, books-of-account or audit questions.

Do not select a capital-gains classification solely because another retail taxpayer used it. The correct treatment depends on the taxpayer’s own facts.

Common Schedule VDA Filing Mistakes

Reporting only withdrawals to the bank

A taxpayer may sell crypto into a stablecoin and leave the proceeds on an exchange. The absence of an INR withdrawal does not necessarily mean there was no transfer.

Ignoring crypto-to-crypto swaps

Exchanging BTC for ETH can involve a transfer even though no rupees entered the bank account.

Reporting net exchange profit

The exchange’s net figure may offset losing trades against winning trades, which conflicts with the VDA loss restrictions.

Deducting every platform fee

Only cost of acquisition, if any, is permitted under the special computation. Other expenses should not automatically reduce VDA income.

Using net proceeds after TDS

Schedule VDA consideration should not be reduced merely because 1% TDS was withheld.

Treating TDS as the final tax

TDS is a credit. The special-rate liability must still be calculated.

Copying AIS totals as taxable income

AIS may show reported transaction values, not taxable gains. Reconcile each entry rather than taxing the entire AIS amount or treating it as final profit.

Ignoring transactions absent from AIS

Self-custody, offshore and decentralised transactions may require reporting even when no matching entry is visible.

Combining all trades into one unsupported annual row

The current official guidance describes Schedule VDA as transaction-wise. Preserve row-level reporting and supporting calculations.

Mixing financial years

Do not include April 2026 transactions in AY 2026-27.

Claiming undocumented acquisition costs

A deduction must be supportable. Reconstruct records rather than using memory.

Using old ITR screenshots

Field labels and validation behaviour can change. Use the live AY 2026-27 utility. The Income Tax Department released updated ITR-2 and ITR-3 utilities and schemas during May and June 2026.

Complete Schedule VDA Filing Workflow

Phase 1: Collect

• List every platform and wallet.
• Download full-year statements.
• Export blockchain activity.
• Retrieve P2P bank and UPI records.
• Download AIS, TIS and Form 26AS.
• Preserve raw files before editing them.

Phase 2: Classify

Classify each record as:

• Acquisition
• Transfer
• Self-transfer
• Income receipt
• Fee
• TDS
• Non-VDA transaction
• Complex case requiring review

Phase 3: Calculate

For every transfer:

• Identify the asset and quantity.
• Match the acquisition lot.
• determine acquisition date.
• Determine transfer date.
• Establish gross INR consideration.
• Establish supportable cost of acquisition.
• Calculate positive income or economic loss.
• Record TDS separately.

Phase 4: Reconcile

• Match exchange activity to the ledger.
• Match AIS entries to the ledger.
• Match Form 26AS credits to TDS records.
• Investigate duplicates and missing entries.
• Submit AIS feedback where appropriate.
• Follow up with deductors on missing TDS.

Phase 5: Populate the Return

• Select AY 2026-27.
• Select the applicable ITR form.
• Enable Schedule VDA.
• Enter transaction-wise details.
• Review positive VDA income.
• Verify the corresponding special-rate computation.
• Verify TDS credit.
• Review tax payable and interest.
• Complete all other applicable schedules.

Phase 6: Validate and Preserve

• Run the utility’s validation checks.
• Review the return preview.
• Confirm that no transaction row was truncated or skipped.
• Pay any self-assessment tax.
• Submit and e-verify the return.
• Retain the filed return, acknowledgement, working ledger and source documents.

Final Pre-Filing Checklist

Use this checklist before submitting:

• The reporting period is 1 April 2025 to 31 March 2026.
• Every exchange, wallet and P2P account has been identified.
• Full transaction history has been downloaded.
• Crypto-to-crypto swaps have been reviewed.
• Self-transfers have been separated from disposals.
• Each transfer has an acquisition date.
• Each transfer has a transfer date.
• Every foreign-currency amount has an INR valuation.
• The valuation source is documented.
• Acquisition-lot matching is consistent.
• Unsupported expenses have not been added to cost.
• Gross consideration is used before TDS.
• Losing transactions remain in the supporting ledger.
• Positive transactions have not been improperly netted against losses.
• AIS has been downloaded and reviewed.
• TIS has been checked.
• Form 26AS has been matched to TDS records.
• Missing TDS has been followed up with the deductor.
• Gifts, airdrops and rewards have been reviewed separately.
• DeFi, mining, NFT and foreign-asset cases have been flagged.
• The correct ITR form has been selected.
• The live AY 2026-27 utility has been used.
• The return has been previewed before submission.
• Supporting documents are stored securely.

Frequently Asked Questions

Is Schedule VDA mandatory for every person who owns crypto?

Schedule VDA concerns income arising from VDA transfers. Merely holding an asset without transferring it is different from selling, swapping or otherwise disposing of it. However, other reporting obligations may still apply depending on the taxpayer’s residential status, foreign holdings and return requirements.

Which ITR should a salaried person use for crypto gains?

A salaried individual with VDA investment activity and no business or professional income will generally examine ITR-2. ITR-2 contains Schedule VDA and is intended for individuals and HUFs without business or professional income.

When is ITR-3 required?

ITR-3 generally applies where an individual or HUF has profits and gains from business or profession. It may be relevant where VDA activity is treated as a business or where the taxpayer has another source of business or professional income.

Can I file ITR-1 after selling cryptocurrency?

The official guidance lists Schedule VDA as applicable to ITR-2, ITR-3, ITR-5, ITR-6 and ITR-7—not ITR-1. An individual who must report a VDA transfer should therefore review the applicable Schedule VDA-enabled return.

Is crypto tax charged on the complete sale amount?

The 30% special rate applies to income from the transfer, calculated after allowing the cost of acquisition, if any. The 1% TDS mechanism is different and generally applies to consideration.

Can exchange fees be deducted?

Section 115BBH permits cost of acquisition but prohibits other expenditure or allowances. Do not automatically deduct exchange fees. Whether a particular acquisition-linked charge legally forms part of cost can be fact-dependent.

Can Bitcoin losses be adjusted against Ethereum gains?

Section 115BBH prohibits the set-off and carry-forward of VDA transfer losses. The official Schedule VDA guidance says a transaction loss is reported as nil and positive transaction amounts are aggregated.

Is a crypto-to-crypto swap taxable?

A swap involves the transfer of one asset in exchange for another. Section 194S expressly recognises consideration paid in kind or in exchange for another VDA. Calculate and document the INR value of the asset received.

Do I report transactions that are missing from AIS?

Your return should be based on complete and accurate records, not only items already visible in AIS. Review self-custody, P2P, offshore and decentralised activity even where an entry is absent.

What should I do when AIS shows a transaction I do not recognise?

Check all exchanges and accounts, compare dates and values, and determine whether the entry is duplicated, incorrectly reported or belongs to another transaction. AIS provides a feedback facility for reported information.

What if TDS was deducted but is not in Form 26AS?

Verify your PAN and transaction details, contact the deductor or exchange and request correction of the TDS statement. Obtain professional advice before claiming a credit that does not match Form 26AS.

Is the 1% TDS an additional tax?

TDS is generally a tax credit, not a separate final tax on top of the correctly computed liability. It must be matched with Form 26AS and claimed in the appropriate return.

Do I need to report small transactions?

A small transfer may still be relevant to the transaction-wise Schedule VDA calculation. The Section 194S thresholds concern the payer’s TDS obligation and should not be treated as a general exemption from income reporting.

Can I use an average annual crypto price?

A yearly average may not reflect the value at the time of a transfer. Use a consistent, defensible transaction-time valuation method and preserve the underlying data.

Is FIFO compulsory for Indian crypto tax?

There is no simple universal rule in the VDA provisions stating that every taxpayer must use FIFO for every asset. FIFO is used by many calculations and tools, but the selected method should be consistent, factually supportable and professionally reviewed where material.

How do I report an airdrop?

First determine the tax treatment when the token was received. Then, when the token is transferred, determine the supportable acquisition cost and consideration for Schedule VDA. The answer depends on the nature of the airdrop and the earlier treatment.

What is the cost of a gifted VDA?

The answer can depend on whether the receipt was taxable, whether a gift exemption applied and whether previous-owner cost rules apply. Section 49 contains previous-owner cost provisions for certain gifts and inheritances.

What if I cannot obtain my purchase history?

Reconstruct it using bank records, exchange emails, wallet transactions and blockchain explorers. Do not claim an unsupported cost from memory. Seek professional advice if a material cost cannot be documented.

Can I claim a deduction for stolen crypto?

There is no straightforward general Schedule VDA deduction for a hack, lost key or inaccessible exchange balance. The facts should be reviewed professionally before making a filing position.

Does transferring crypto to my own wallet create tax?

A genuine transfer between wallets under the same beneficial ownership may differ from a disposal, but the transaction should be documented. Confirm that no swap, bridge, wrapping or protocol transaction occurred in the process.

Are foreign exchange transactions exempt if they do not appear in AIS?

No such general exemption should be assumed. Offshore activity may create both VDA reporting and separate foreign-asset or residential-status considerations.

Does AY 2026-27 include transactions from April 2026?

No. AY 2026-27 relates to income earned during FY 2025-26, ending on 31 March 2026. Transactions from 1 April 2026 fall within the new tax-year framework and are not part of the AY 2026-27 ledger.

Final Takeaway

The difficult part of Schedule VDA is rarely typing numbers into the return. The difficult part is proving that the numbers are complete, transaction-specific and reconciled.

A defensible workflow starts with a full platform inventory, continues through a transaction-level INR ledger and finishes with AIS, TIS and Form 26AS reconciliation. Positive transfer income must be separated from non-deductible losses, gross consideration must not be confused with post-TDS receipts, and unsupported costs should not be claimed simply to complete a missing field.

Simple buy-and-sell activity may be manageable with careful records. DeFi, staking, mining, airdrops, NFTs, gifts, missing purchase histories, foreign exchanges and business-style trading should be treated as professional-review points rather than forced into assumptions.

Schedule VDA rewards accurate record-keeping, not speed. Build the ledger first, reconcile it second and populate the return only after the supporting figures can be traced back to source evidence.