If you sold, swapped or spent any crypto in FY 2025-26, ITR-1 (Sahaj) is off the table. Crypto income has to be reported in Schedule VDA, and that schedule only exists in ITR-2 and ITR-3, as the official ITR-2 form for AY 2026-27 and ITR-3 form show. ITR-4 (Sugam) doesn’t carry it either.
Which of the two you need depends less on your crypto and more on everything else you earn.
The one rule that decides it
The test is simple: do you have any income from business or profession?
- No (salary, rent, interest, capital gains only): file ITR-2, and your crypto goes in Schedule VDA under the capital gains head.
- Yes (a shop, freelancing, consulting, or share F&O and intraday trading): file ITR-3, even if your crypto itself was a plain long-term holding.
As CA Pratibha Goyal told Mint, “crypto income alone does not determine whether a taxpayer should file ITR-2 or ITR-3. The deciding factor is the overall nature of income.” If crypto trading is itself your business, that also points to ITR-3, with the income shown under the business head.
Five Indian crypto holders, five answers
Our quick decision table, built from the rule above:
| Who | Other income | Form |
|---|---|---|
| Salaried engineer who sold some Bitcoin | Salary, FD interest | ITR-2 |
| Retired parent who swapped ETH for USDT | Pension, rent | ITR-2 |
| Student with only crypto gains | None | ITR-2 |
| Salaried employee who also trades Nifty options | Salary + F&O (business) | ITR-3 |
| Freelance designer paid by clients, holds BTC | Professional receipts | ITR-3 |
The trap is the fourth row. Many salaried people assume ITR-2 because crypto is “just investment”, but a single F&O trade turns the whole return into ITR-3. Freelancers already paid in USDT have a separate GST question we covered in our freelancer guide.
Schedule VDA wants every trade, and hides your losses
The schedule is transaction-wise: every sale, swap or spend is its own row with date of acquisition, date of transfer, cost and sale value. The form’s own note says to “enter nil in case of loss”, and only positive rows are totalled. That is the 30% rule for crypto in practice: a loss on one coin can’t be set off against a gain on another, as we explained in our loss set-off guide.
Here is how three rows look for a typical investor:
| Row | Trade | Cost | Sale value | Income entered |
|---|---|---|---|---|
| 1 | Sold BTC | ₹1,00,000 | ₹1,40,000 | ₹40,000 |
| 2 | Sold ETH | ₹60,000 | ₹45,000 | Nil (₹15,000 loss) |
| 3 | Sold SOL | ₹20,000 | ₹30,000 | ₹10,000 |
| Total | ₹50,000 |
Tax at 30% plus 4% cess is ₹15,600, even though the net profit across all three trades was only ₹35,000. The 1% TDS your exchange deducted on each sale (₹2,150 on ₹2,15,000 of sales here) is a credit against that bill; match it with Form 26AS and AIS first, or use our TDS reconciliation tool.
One more column worth knowing: for coins you received as a gift, the form asks for the value already taxed as a gift, or otherwise the previous owner’s cost. Our crypto gift tax guide has the details.
Already filed in the wrong form?
If you filed ITR-1 for AY 2026-27 and left crypto out, or squeezed it into the wrong place, a revised return can still be filed until 31 December 2026, which we covered in our missed-crypto ITR guide. After that, the costlier updated return (ITR-U) is the remaining route.
BtcMedia verdict
For most Indian crypto holders the answer is ITR-2, and the real work is the row-by-row Schedule VDA, not the form choice. Pull a full-year trade report from every exchange before you start, and run the numbers through our crypto tax calculator for India to check the total.
How we calculated this: example trades are illustrative; tax = 30% of positive Schedule VDA rows plus 4% cess; form rules from the official AY 2026-27 ITR-2 and ITR-3 forms, checked 1 November 2026, 2:50 AM IST.
FAQ
Can I file ITR-1 if my only crypto activity was buying, not selling? Tax arises on transfer, so a year with only purchases has no Schedule VDA income. Holding foreign or other assets may still need other schedules, so check the eligibility conditions of ITR-1 before using it.
I have salary and one crypto sale at a loss. Do I still need ITR-2? Yes. The transfer still has to be reported in Schedule VDA, with the income entered as nil.
Does F&O trading in shares really push me to ITR-3? Yes. F&O income is treated as business income, and any business income means ITR-3 instead of ITR-2.
This article is for information only and is not tax or financial advice. Check your own case with a chartered accountant.