ITR filing 2026: How gains from crypto and foreign stocks are taxed in India; what happens if you fail to report it?
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- India imposes a flat 30% tax plus a 4% cess on profits from virtual digital assets under the VDA rules, requiring separate disclosure on Schedule VDA in ITR filings.
- Crypto gains may be reported as business income (ITR‑3) or capital gains (ITR‑2), but any loss cannot be offset against other income, unlike stock losses.
- Income Tax Department can levy penalties of 50‑70% of the tax due plus interest for undisclosed crypto income, and a ₹10 lakh fine per year (and up to 7 years’ imprisonment) for failing to report foreign assets.
- Foreign stocks are taxed according to holding period and nature of gains, must be disclosed separately, and non‑disclosure also forfeits benefits under double‑taxation avoidance agreements.
- ClearTax notes that a 1% tax deducted at source (TDS) applies to all crypto transactions, while gifts or airdrops are classified under Income from Other Sources.
Why it matters: Indian investors must now allocate 30% of crypto profits to tax and risk 50‑70% penalties for nondisclosure, while foreign‑stock holders face ₹10 lakh fines and possible imprisonment, tightening compliance and reducing capital inflows.
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