ITR-2 or ITR-3 for crypto: which form do you need?
Salaried with crypto gains? Trading every day? Here's how to choose between ITR-2 and ITR-3 for crypto income in India, and why ITR-1 won't work.
- Checked against the rules: Aug 2026
- Sources cited · No buy or sell calls
- Tax year 2026–27
Choosing the wrong form is one of the most common crypto filing mistakes in India. The good news is that the choice is simple once you know what each form is for.
Why ITR-1 and ITR-4 don't work
ITR-1 (Sahaj) and ITR-4 (Sugam) are simplified forms. Neither includes Schedule VDA, the section where crypto transfers are reported. If you had any crypto income, you need ITR-2 or ITR-3.
When to use ITR-2
ITR-2 is for individuals and HUFs without business or professional income. It suits you if your income comes from:
- salary or pension,
- house property,
- capital gains from shares, mutual funds or property,
- interest and other sources,
- and crypto held as an investment.
This covers most people who buy and hold crypto, or trade occasionally, alongside a job.
When to use ITR-3
ITR-3 is for individuals and HUFs with business or professional income. Use it if:
- you are a freelancer, consultant or business owner, whether or not crypto is involved, or
- you trade crypto so frequently and systematically that you treat it as a business.
There is no fixed number of trades that makes crypto a business. Frequency, volume, holding periods, whether it's your main occupation and how you've treated it in past years all matter. Once you choose business treatment, stay consistent across years.
Does the choice change the tax?
Not the rate. Crypto gains are taxed at 30% plus cess under either head, and in both cases:
- only the cost of acquisition can be deducted,
- losses can't be set off or carried forward, and
- the 1% TDS can be claimed against your tax.
The difference is in reporting. Under ITR-3 you may also need to maintain books of account and, above certain thresholds, get an audit. That adds cost and work.
Quick decision guide
| Your situation | Form |
|---|---|
| Salaried, bought and sold some crypto | ITR-2 |
| Salaried, also hold shares and mutual funds | ITR-2 |
| Freelancer or business owner with any crypto | ITR-3 |
| Full-time crypto trader | ITR-3 |
| Only bought and held crypto, no sales | ITR-1 may still work if nothing else rules it out |
Once you've picked the form, follow our Schedule VDA guide to report each transfer, and see the complete crypto tax guide for the underlying rules.
Frequently asked questions
I only bought crypto this year. Do I need ITR-2?
Not because of crypto. Schedule VDA is for transfers, so if you made none you can use whichever form fits your other income. Some foreign holdings may change this; see Schedule FA.
Can I switch from business to capital gains treatment later?
It's best to be consistent. Switching without a real change in how you trade can draw questions from the tax department. Talk to a tax professional before changing.
Does F&O trading on crypto futures change the form?
Crypto derivatives are a grey area under Indian tax law. If you report them as business income, you'll file ITR-3. Read crypto futures and options tax and take professional advice.
Which ITR form is for crypto gains?
Most investors use ITR-2. If you have business or professional income, or report crypto trading as business income, use ITR-3.
Can I use ITR-1 if I sold crypto?
No. ITR-1 doesn't have Schedule VDA, so it can't be used if you had crypto gains or losses.
Sources
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