How to File ITR for Crypto Salary from Foreign Company India

How to File ITR if You Earn Salary in Crypto Working for a Foreign Company in India

Thousands of Indians are working remotely for foreign companies, and some are being paid in cryptocurrencies. However, many still have important questions: How should this income be taxed? Will the government apply a 30% tax on the entire salary?

Short answer? No. But it’s more complicated than a simple yes or no. And if you get it wrong, the IT department can knock on your door with a notice.

When You Receive Crypto Salary

Relevant Law: Section 17(1) & Section 5 of the Income Tax Act

Let’s assume Ram receives his salary in USDT to keep things simple. Since he is an Indian tax resident living in India, his entire global income is taxable in India, regardless of the country it comes from or the currency used.

When salary is received in cryptocurrency, it is treated just like a normal salary. The key point is that the Fair Market Value (FMV) of the crypto on the date of receipt is calculated in INR, and this value is added to total income under the head “Income from Salary.”

So, whenever USDT is credited to Ram’s wallet, he simply needs to check its INR value on that day. That converted amount becomes his salary income for tax purposes. This income is then taxed according to normal income tax slab rates, not the 30% crypto tax. He can also claim standard deductions like the ₹50,000 deduction under Section 16.

Example:
If Ram receives 1,000 USDT on 1st June 2025 and the value of USDT on that day is ₹84, his salary income will be ₹84,000. This amount will be taxed based on his applicable income tax slab (5%, 20%, or 30%, depending on his total annual income).

When He Sells/Converts the USDT to INR

Relevant Law: Section 115BBH of the Income Tax Act

When Ram decides to sell or transfer the USDT received as salary, it is treated as a second taxable event. Any gains made are taxed at a flat rate of 30% under Section 115BBH of the Income Tax Act.

The “gain” here = Selling price minus the cost of acquisition (FMV at receipt).

Example (continuing above):

He received 1,000 USDT at ₹84 = acquisition cost ₹84,000
He sells it on XYZ exchange when 1 USDT = ₹86
Sale value = ₹86,000
Gain = ₹2,000
Tax on gain = 30% of ₹2,000 = ₹600 (+ 4% cess)

If USDT rate is almost the same when he received vs sold (since USDT is a stablecoin pegged to $1), the gain will be nearly zero or very minimal. This is actually a big advantage for him compared to volatile crypto.

Which ITR Form to File?

Since Ram has:

Salary income (foreign, in crypto)
Capital gains from selling USDT (VDA)
Possibly foreign assets

He must file ITR-2 (not ITR-1, because he has foreign assets and capital gains from VDA).

For the financial year 2026-25 and assessment year 2025-26, Ram need to declare his cryptocurrency taxes using either the ITR-2 form (if reporting as capital gains) or the ITR-3 form (if reporting as business income). The new ITR forms include a specific section ‘Schedule VDA’ for reporting cryptocurrency gains or income.

Step-by-Step ITR Filing

Step 1: Collect Documents

Exchange transaction history (salary credit dates + USDT amounts)
exchange transaction history (sell dates + INR amounts received)
Bank statements showing INR credits
Salary agreement/offer letter from Company

Step 2: Calculate Salary Income (Layer 1)

For each monthly USDT salary received, note the INR value on that date (use CoinMarketCap/CoinGecko historical price or exchange rate on that date)
Sum up all months = Total Salary Income in INR

Step 3: Calculate VDA Gains (Layer 2)

For each USDT sale on Exchange : Sale Value (INR received) minus Acquisition Cost (FMV on salary receipt date)
For the P2P period: same calculation applies

Step 4: Fill ITR-2

Schedule S (Salary): Enter total salary income (converted to INR)
Schedule VDA: Enter each USDT transaction: date, cost of acquisition, sale value, gain
Schedule FA (Foreign Assets): Disclose the Exchange wallet as a foreign asset: this is mandatory
Schedule FSI (Foreign Source Income): Declare the foreign salary income here
TDS Schedule: If Exchange deducted 1% TDS, claim it here from your AIS/Form 26AS

Step 5: Pay Self-Assessment Tax Calculate total tax = slab tax on salary + 30% on VDA gains + 4% cess — minus any TDS already deducted, and pay the balance.

Deadline: July 31st of the Assessment Year.

BUSTING THE “5% CRYPTO TAX” MYTH

Some people on YouTube, Quora, and WhatsApp groups are spreading a rumour that “crypto tax has been reduced to 5% in the new budget.”

This is 100% FALSE. Here’s the actual truth:

Budget 2025 was presented on 1st February 2025 and Budget 2026 followed in February 2026. In BOTH budgets, Finance Minister Nirmala Sitharaman kept the 30% tax and 1% TDS completely unchanged. The industry lobbied hard for a reduction. The government said no.

There IS a 5% figure in the law, but it’s not a benefit. It’s actually a punishment: if you haven’t filed ITR for 2 consecutive years AND your TDS in each of those years was ₹50,000+, the TDS rate on your crypto transactions jumps to 5% instead of 1%. That’s a penalty for non-filers!

So anyone telling you “crypto tax is now 5%” either misread a punishment clause or is spreading misinformation. Don’t fall for it.

Schedule FA- The Most Ignored But Most Dangerous Part

This deserves its own section because most people completely skip it.

Ram holds USDT in his Binance wallet– which is registered in the Cayman Islands / Malta. That is a foreign asset.

Every Indian tax resident who holds a foreign account, wallet, or asset must disclose it in Schedule FA of ITR-2, every single year, even if you made zero income from it.

Failure to do so can attract prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which allows penalties of up to 300% of the asset value and potential imprisonment.

India is also joining the OECD’s Crypto-Asset Reporting Framework (CARF) by April 2027, which means foreign exchanges will automatically report Indian users’ holdings to the Indian government. Your Binance wallet will not stay hidden.

Disclaimer: This article is for informational purposes only and does not constitute legal, financial, or tax advice. Please consult a qualified Chartered Accountant (CA) or financial advisor before making any tax-related decisions. Tax laws are subject to change — always verify with official government sources.