Keep detailed records of all buy/sell dates, amounts, prices, and exchange platforms. Use spreadsheets or software to record cost basis. This foundation is essential for capital gains calculations and prevents disputes with tax authorities.
Short-term gains (held <2 years) are taxed as ordinary income at your slab rate (up to 30% for high earners). Long-term gains (held 2+ years) face a 20% tax with indexation benefit, which can significantly reduce your effective rate.
Exchanges in India collect 1% TCS on every crypto purchase. This isn't tax itself but a creditable advance. Understand it reduces your cash position and verify it's credited against your final tax liability.
If you buy crypto in USD or hold it overseas, fluctuations in INR/USD count as forex gains. These are also taxable. Use your purchase and sale dates' respective exchange rates for correct calculations.
Declare all crypto transactions in your ITR under Schedule CG (Capital Gains). Misreporting or underreporting invites scrutiny. File on time; late filing can result in penalties even if you owe no tax.
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