ITR Filing for Crypto & Stock Market Income in FY 2025-26
Welcome to our blog, ITR Filing for Crypto & Stock Market Income in FY 2025-26! Filing your Income Tax Return (ITR) for earnings from crypto and stock market transactions might feel confusing, especially with changing rules and multiple income sources. But don’t worry—this guide will make it simple for you. We’ll walk you through the process step by step, explaining how to report gains from crypto trading, stocks, mutual funds, and dividends accurately. You’ll also learn which deductions you can claim, how to avoid common mistakes, and the deadlines you need to keep in mind. By following this guide, you can ensure your ITR filing is correct, prevent penalties, and enjoy a smooth, hassle-free tax filing experience.
Understanding Crypto and Stock Market Income
Income from cryptocurrencies and the stock market is taxed differently under the Income Tax Act, so it’s important to know how each is treated. Crypto income includes profits from buying, selling, or transferring cryptocurrencies. Whether you trade frequently or hold crypto as an investment, all gains are taxable, and you must report them in your ITR. Keeping proper records of transactions, dates, and values is essential for accurate reporting and avoiding penalties.
Stock market income can come from multiple sources, such as equity shares, mutual funds, dividends, derivatives, or intraday trading. Long-term and short-term capital gains have different tax rates, and losses can sometimes be set off against gains. Understanding the nature of your stock market income will help you choose the correct ITR form and calculate your taxes properly. Accurate classification ensures smooth filing and prevents issues with the Income Tax Department later.
Applicable ITR Forms for Crypto & Stock Income
Choosing the correct ITR form is very important to ensure smooth filing and avoid any issues with the Income Tax Department. For most individuals who earn capital gains from stocks or cryptocurrencies, ITR-2 is the suitable form. This form is meant for people who do not run a business and only have income from investments, salary, or other sources. It allows you to report both short-term and long-term capital gains accurately.
However, if you are actively trading in stocks or crypto as a business, earning profits regularly, or doing intraday/derivative trading, you may need to file ITR-3. This form is designed for individuals who have income from a business or profession. Filing the correct form ensures that your income is reported properly, helps claim applicable deductions, and reduces the risk of notices or penalties from the tax authorities.
Types of Income from Crypto and Stocks
Income from crypto and stock market activities can be divided into three main types:
Capital Gains: This is the profit you earn when you sell cryptocurrencies or stocks at a higher price than you bought them. Capital gains can be short-term or long-term, and each type has different tax rules.
Business Income: If you trade frequently, do intraday trading, or deal in derivatives (F&O), your profits may be treated as business income. This type of income is taxed differently and may require filing a business-related ITR form.
Interest or Dividends: You may earn money from crypto staking, lending, or dividends from stocks. This income is also taxable and should be reported in your ITR accurately.
How to Report Crypto Transactions in ITR
When filing your ITR, all crypto transactions need to be reported properly to stay compliant with tax laws. If you buy and sell cryptocurrencies for profit, these transactions are usually reported under “Capital Gains.” Short-term gains (crypto held for less than 36 months) are taxed at your normal income tax rate, while long-term gains may have a different rate. If you earn income from crypto staking, lending, mining, or airdrops, it is generally reported under “Income from Other Sources.”
To make filing easier and accurate, maintain detailed records of every transaction. This includes the purchase date, sale date, amounts, price at the time of transaction, and transaction IDs or wallet addresses. Using spreadsheets or specialized crypto tax software can help track these easily. Accurate reporting not only ensures compliance but also helps you claim any losses to offset gains, reduce tax liability, and avoid unnecessary scrutiny or penalties from the Income Tax Department.
Taxation on Stock Market Income
Income from the stock market is taxed differently based on the type of investment or trading:
Equity Shares & Mutual Funds: If you sell shares or equity mutual funds, the long-term capital gains (LTCG) above ₹1 lakh are taxed at 10% (without considering inflation). Short-term capital gains (STCG) from equity are taxed at 15%, regardless of your income slab.
Intraday and F&O Trading: Profits from frequent trading, intraday deals, or derivatives (Futures & Options) are considered business income. These are taxed according to your income tax slab, just like your salary or other earnings.
Dividends: Any dividends you receive from stocks or mutual funds are fully taxable under your income slab. The earlier exemption on dividends was removed after March 31, 2023, so you must report all dividend income in your ITR.
Capital Gains – Short Term vs Long Term
When you sell crypto or stocks, the profit you make is called a capital gain, and it can be short-term or long-term, depending on how long you held the asset. For crypto, if you sell within 36 months of buying, it is considered a short-term capital gain, and for stocks, selling within 12 months is treated as short-term. Short-term gains are usually taxed at a higher rate.
If you hold the asset beyond these periods, the profit is classified as a long-term capital gain. For example, crypto sold after 36 months or stocks sold after 12 months are long-term. Long-term gains often have lower tax rates, making it important to calculate the holding period and profits accurately. Keeping clear records of purchase and sale dates, amounts, and transaction details will help you report the gains correctly in your ITR and avoid penalties.
Common Penalties for Incorrect Reporting
Not reporting your crypto or stock market income correctly can lead to penalties from the Income Tax Department. Under Section 270A, you may have to pay fines if your income is under-reported or misreported, and Section 234F imposes fees for late filing of your ITR.
In addition, if you file your return late, you may have to pay interest on any unpaid tax, which can add up quickly. To avoid these issues, make sure to report all income accurately, keep proper records of all transactions, and file your ITR on time. Correct reporting not only keeps you compliant but also gives peace of mind, preventing unnecessary notices or fines.
Get Expert Assistance for Hassle-Free ITR Filing
Filing your ITR for crypto and stock market income can be complicated, especially with multiple transactions, capital gains, and new tax rules. The experts at ITRAdda.com can guide you step by step, ensuring that all your crypto trades, stock sales, dividends, and other income are reported correctly. They also help you claim all eligible deductions, so you pay only what’s necessary and avoid mistakes.
By seeking professional help, you can save time and reduce stress, while staying fully compliant with the Income Tax Department. For reliable assistance, visit ITRAdda.com or call 📞+91 97263 65833 and get your ITR filed smoothly and on time.
