Crypto Gains in ITR: Don’t Let Cumulative Reporting Cost You! Why Line-by-Line Crypto Reporting in ITR Is a Must
Crypto Gains in ITR: Don’t Let Cumulative Reporting Cost You! Why Line-by-Line Crypto Reporting in ITR Is a Must
It is being noticed that several individuals report their crypto transactions in a cumulative way while filing their income tax return (ITR). Meaning, they show the total profit or loss from all transactions combined in their return. However, according to the law, this is not the correct way to report crypto transactions. Ideally, each individual transaction should be reported separately, one by one (Line-wise Transaction), showing the buy date, sell date, amount, and gain/loss for each transaction. This helps in the accurate calculation of capital gains (short-term or long-term) and also keeps things clear in case of a tax audit.
What is Cumulative Reporting?
Cumulative reporting means combining all the buy amounts and all the sell amounts into two totals, then subtracting the total buy from the total sell to get the net gain or loss. Usually, individuals do this because it seems easier, especially when there are so many trades. However, this method ignores the actual order and pairing of buys and sells, which can lead to wrong tax calculations.
Why Line-wise (Transaction-wise) Reporting is Correct?
Line-wise reporting means matching each crypto sale with the corresponding purchase, in the order the transactions happened (usually the FIFO: First In First Out method is used). This approach ensures that each gain or loss is calculated per transaction, not in bulk.
This is the way the income tax department expects you to report crypto transactions.
Below is an example to understand this concept. In this example, if you report cumulatively, you might show Rs. 6,600 as the gain, which is less than the actual taxable amount. But if you report line-by-line, you correctly show Rs. 7440 as your taxable gain, because losses are not allowed to be adjusted.
| Crypto | Date of Sale | Date of Purchase | Sale Consideration (Rs. ) | Cost of Acquisition (COA) (Rs. ) | Gain/Loss (Rs. ) | Taxable Gain (Rs. ) |
| Crypto A | 21-03-2025 | 09-03-2025 | 11,000 | 10,000 | 1,000 | 1,000 |
| Crypto A | 22-01-2025 | 23-01-2024 | 8,550 | 9,000 | -450 | 0 |
| Crypto B | 23-12-2024 | 24-12-2023 | 1,05,000 | 1,00,000 | 5,000 | 5,000 |
| Crypto C | 23-12-2024 | 27-02-2024 | 12,610 | 13,000 | -390 | 0 |
| Crypto C | 25-07-2024 | 29-09-2023 | 13,440 | 12,000 | 1,440 | 1,440 |
| 6600 | 7440 |