Reporting Crypto: Schedule VDA and the AIS

Many crypto holders file their returns on the assumption that the department knows only what the holder chooses to tell it. That is not quite right. Every deduction of tax on a crypto sale reaches the department through the deductor’s statement, and from there it goes into the taxpayer’s annual information statement. The return-processing software is built to notice when that tax is claimed but the matching income is not offered. A newer, international reporting regime for exchanges also began in India on 1 January 2026. This guide covers how a transfer is reported in the return, what the AIS shows, and what exchanges must now report and about whom.

Which Act applies

• Assessment year 2026-27 (transfers in the year to 31 March 2026): the return is filed under the Income-tax Act, 1961. The forms are the ITR-2 and ITR-3 forms notified under the Income-tax Rules, 1962. The annual information statement rests on section 285BB.
• Tax year 2026-27 onwards: the Income-tax Act, 2025 applies. The annual information statement is made under section 510 and rule 245 of the Income-tax Rules, 2026, in Form No. 168. Crypto exchanges report under section 509 and rules 241 to 244.

Which return form

Schedule VDA appears in ITR-2 and ITR-3. In the CBDT’s JSON schemas for assessment year 2026-27, the ITR-1 schema has no Schedule VDA. A person with income from transfer of a virtual digital asset therefore files ITR-2 or, if that person has business or professional income, ITR-3.

The two forms differ in one field. The schema for ITR-2 allows only “CG : Capital Gain” as the head of income. The schema for ITR-3 allows “BI : Business Income” or “CG : Capital Gain”. This guide does not cover the question of which head applies. The rate is 30 per cent either way, as explained in Tax on Crypto and Other Virtual Digital Assets.

Schedule VDA, column by column

Schedule VDA is headed “Income from transfer of Virtual Digital Assets”. Each transfer is entered on its own row. The CBDT’s schema for assessment year 2026-27 makes every field required for each row.

Column	Field	Notes
2	Date of acquisition
3	Date of transfer	The CBDT’s validation rules reject a date after 31 March of the financial year.
4	Head under which income is to be taxed	Capital gain in ITR-2; business income or capital gain in ITR-3.
5	Cost of acquisition	The form gives two instructions. For a gift, enter “the amount on which tax is paid u/s 56(2)(x) if any”. In any other case, enter the “cost to previous owner”.
6	Consideration received
7	Income from transfer	Column 6 less column 5, with “nil in case of loss”. The schema does not accept a negative value.

The column wording above is taken from the Schedule VDA printed in the ITR form under the Income-tax Rules, 1962. The column structure is confirmed for assessment year 2026-27 by the CBDT’s JSON schema and validation rules. The schema fields are DateofAcquisition, DateofTransfer, HeadUndIncTaxed, AcquisitionCost, ConsidReceived and IncomeFromVDA.

Two totals follow the rows:

• A: the sum of positive incomes entered under business income, which goes to Schedule BP.
• B: the sum of positive incomes entered under capital gain, which goes to item C2 of Schedule CG.

The validation rules for assessment year 2026-27 tie these together:

• Column 7 must equal column 6 less column 5.
• Item C2 of Schedule CG must equal total B.
• In ITR-3, item 3g of Schedule BP (“u/s 115BBH (net of Cost of acquisition, if any)”) must match total A.
• The figure taxed at 30 per cent under section 115BBH in Part B-TI must match item C2.
• The quarter-wise break-up in Table F of Schedule CG must add up to C2. That break-up is used for interest on deferred advance tax under section 234C.

What Schedule VDA does not allow. A loss on one row cannot be entered against a profit on another. Column 7 takes nil for a loss, and the totals add only positive incomes. This is the return-form version of section 115BBH(2), which bars both set-off and carry-forward.

The TDS schedule

Tax deducted on a crypto sale is claimed in the TDS schedule of the return under the deductor’s section code. The schema lists two codes for virtual digital assets:

• “194S - Payment of consideration for transfer of virtual digital asset by persons other than specified persons”; and
• “Proviso to sub-section(1) of section 194S/4SP - Payment for transfer of virtual digital asset where payment is in kind or in exchange of another virtual digital asset and tax required to be deducted is paid before such payment is released”.

TDS on Crypto Transfers explains the deduction itself.

The mismatch flag. The validation rules for ITR-2 and ITR-3 for assessment year 2026-27 include a Category D rule. Under it, a return can be uploaded, but the taxpayer is told that a claim may not be allowed. The rule is triggered where TDS has been deducted on income from virtual digital assets and “the corresponding income from VDA has not been offered to tax or is not offered to tax completely”. A credit claimed without the income is therefore a known trigger at processing. The Intimation under Section 143(1) covers what follows.

What the AIS shows

The e-filing portal’s AIS FAQ describes Part B of the annual information statement as holding:

• TDS/TCS information, for which “the Information code of the TDS/TCS, Information description and Information value is shown”;
• SFT information, from statements of financial transactions;
• payment of taxes;
• demand and refund; and
• other information.

Rule 245(1) of the 2026 Rules lists the same categories for Form No. 168, and adds pending and completed proceedings.

For crypto, the source of the AIS entry is the deductor’s TDS statement. A sale on which 1 per cent was deducted appears under TDS information against the deductor’s code, with the amount paid or credited and the tax. The FAQ does not set out a separate crypto category under SFT information. The SFT provisions of the 2026 Rules do not list crypto transactions as a specified financial transaction. Where an exchange has paid tax under the guidelines instead of the buyer deducting, it reports the transactions in Form No. 142 (rule 219(2)). This guide has not been able to confirm from a primary source how those Form No. 142 entries are labelled in the AIS.

The AIS is not complete. The FAQ says, “There may be other transactions relating to the taxpayer which are not presently displayed”. It adds that the taxpayer “is expected to check all related information and report complete and accurate information”. Transfers below the TDS thresholds, transfers between wallets, and transfers on foreign platforms may not appear at all, but they are still reported in Schedule VDA. Feedback on a wrong AIS entry is covered in Reconciling AIS, TIS and Form 26AS.

Reporting by exchanges: rules 241 to 244

The Finance Act, 2025 inserted section 285BAA into the 1961 Act with effect from 1 April 2026. Its counterpart in the 2025 Act is section 509. Under it, a “reporting entity, as may be prescribed, in respect of a crypto-asset” must furnish information on transactions in a prescribed statement. “Crypto-asset” has the meaning in section 2(111)(d). Rules 241 to 244 of the 2026 Rules set out the details. They follow the structure of the international Crypto-Asset Reporting Framework.

Who reports. The reporting entity is a “reporting crypto-asset service provider” (rule 241(13)). This is any individual or entity that, “as a business”, effects exchange transactions for customers. It may do so as counterparty, as intermediary, or by making a trading platform available. The term includes:

• dealers;
• crypto ATM operators;
• market-making exchanges; and
• brokers.

Rule 242 brings a provider within the Indian rules if it is resident in India, incorporated or managed in India, or has a regular place of business in India. Where the same obligations are completed in a partner jurisdiction, it is relieved.

About whom. The report covers “reportable users” and the “controlling persons” of entity users (rule 243(1)). Under rule 241(16)(g), a reportable person is an individual or entity “resident in a country or territory outside India under the tax laws of such country or territory”. It also includes the estate of a person who was resident outside India. On the text of the rules, therefore, the CARF statement concerns users resident abroad. It is the Indian half of an exchange of information with partner jurisdictions. It is not a report on Indian residents for use in their own assessments. Rule 244(14) states that information exchanged is “only for the limited purposes of administration of taxes by the relevant jurisdiction”.

What is reported. For each reportable user, the statement gives identity details: name, address, country of residence, taxpayer identification number and, for an individual, date and place of birth. Then, for each type of relevant crypto-asset, it gives aggregate figures for the calendar year:

• acquisitions and disposals against fiat currency, as gross amounts paid or received, with the number of units and the number of transactions;
• acquisitions and disposals against other crypto-assets, at fair market value;
• reportable retail payment transactions, meaning transfers in payment for goods or services above USD 50,000;
• other transfers to and by the user, broken down by transfer type; and
• transfers to wallet addresses not known to belong to a virtual asset service provider or financial institution.

Amounts are reported in Indian rupees, net of transaction fees. A foreign-currency amount is converted at the SBI telegraphic transfer buying rate on the date of the transaction (rule 243(8)). Wallet addresses are not reported. The provider must keep them for at least seven years.

Central bank digital currencies, and certain electronic-money products, are outside the term “relevant crypto-asset” (rule 241(9)).

When. Rule 243(1) applies “for each relevant calendar year starting on or after the 1st January, 2026”. The statement is in Form No. 167, due by 31 May of the following calendar year (rule 243(7)). The first statement, for calendar year 2026, is therefore due by 31 May 2027. Where no reportable user is identified, a nil statement is filed (rule 243(6)). The statement is signed by a “designated director” under a digital signature (rule 243(9) to (11)).

Due diligence. Under rule 244, the provider must obtain a self-certification of tax residence and check it against its anti-money-laundering and KYC records. For a new user, this is done when the relationship begins. For pre-existing individual users, it must be done within twelve months from 1 January 2026. Rule 244(3)(i), for pre-existing entity users, refers to twelve months “on and from the 1st January, 2025”. That date sits uneasily with the 31 December 2025 cut-off for “pre-existing” users in rule 241. Records must be kept for at least seven tax years.

Penalty. Section 446 of the 2025 Act was substituted by the Finance Act, 2026 with effect from 1 April 2026. It provides two penalties:

• Rs 200 a day while a statement under section 509(1) is not furnished in time; and
• Rs 50,000 for inaccurate information not corrected under section 509(4), or for failing the due diligence requirement.

Summary

1. Report each transfer of a virtual digital asset in Schedule VDA of ITR-2 or ITR-3, one row per transfer. Give the dates, head of income, cost, consideration and income.
2. Enter nil for a loss. Do not net losses against gains.
3. Make sure total B matches item C2 of Schedule CG, total A matches item 3g of Schedule BP, and the quarterly break-up adds up.
4. Claim TDS under code 194S or 194S proviso, and make sure the matching income is offered.
5. Check the AIS for TDS entries from deductors. Report all transfers, including those the AIS does not show.
6. Exchanges with users resident abroad file Form No. 167 for each calendar year from 2026, by 31 May of the next year.

The next guide, Crypto Gifts, Airdrops, Mining and Staking, covers crypto received without a purchase, and how far the law settles its treatment.