2026 ITR season reveals major reporting gaps among crypto investors: Who can still file tax returns by 31 August?
The 2026 income tax return (ITR) filing season has highlighted a major compliance gap among cryptocurrency investors in India. Many investors believe that once Tax Deducted at Source (TDS) has been deducted on their crypto transactions, their tax obligations are complete. However, this is not true.
According to Punit Agarwal, Founder & CEO at KoinX, TDS is only an advance collection of tax under Section 194S and does not replace the requirement to file an income tax return or report crypto income.
He shared key insights on what this year’s filing season has revealed, who can still file an ITR with crypto investments, and the common mistakes investors should avoid.
What has the 2026 ITR season revealed about crypto tax reporting?
According to internal data shared by Agarwal, only 21.83% of users on their platform who had TDS deducted this season went on to file their crypto taxes. This indicates that a large majority stopped after the TDS deduction, assuming their tax obligations had ended.
Agarwal says this misunderstanding creates two major problems:
- Some investors end up under-reporting their crypto income and may still have additional tax liability.
- Others may be eligible for TDS refunds but fail to claim them because they never file an income tax return.
He emphasises that TDS should be viewed as a checkpoint in the tax process rather than its conclusion. Filing an ITR remains mandatory wherever applicable, and any refund can only be claimed after a valid return is filed.
Who can still file ITR with crypto investments?
He mentioned that investors who missed the original ITR deadline can still file a belated return under Section 139(4), although doing so may attract applicable interest and a late filing fee.
The choice of ITR form depends on the nature of the investor’s crypto activity.
- ITR-2 is generally applicable for individual investors reporting crypto-related capital gains.
- ITR-3 applies where crypto trading is frequent or substantial enough to be treated as business income.
The ITR-2 filing deadline ended on 31 July. Investors who missed it can now file a belated return until 31 December 2026.
According to Agarwal, ITR-3 is particularly relevant for taxpayers engaged in crypto futures and derivatives trading. They still have time to file, with the applicable deadline being 31 August for non-audit cases. For tax audit cases, ITR-3 filers can file their returns until 31 October.
Why should you report all crypto transactions in Schedule VDA?
Agarwal notes that crypto income must be reported under Schedule VDA, which is separate from other income schedules in the ITR.
He says investors should ensure that every type of crypto transaction is disclosed and not restrict reporting to only the buying and selling of cryptocurrencies.
Transactions that should be reported include:
- Crypto buy and sell transactions
- Staking rewards
- Airdrops
- Crypto received as payment for goods or services
Proper reporting in Schedule VDA helps ensure accurate tax computation and reduces the risk of future compliance issues.
Can you still claim a TDS refund if you file a belated ITR?
Another common misconception is that investors who file a belated return are no longer eligible to claim a refund of the TDS deducted on crypto transactions.
According to Agarwal, that is incorrect. He says taxpayers can still claim eligible TDS refunds even while filing a belated return, provided the return is filed correctly and Schedule VDA is duly completed.
Disclaimer: This is for informational and educational purposes only. The views expressed above are those of the expert and not of Mint. Please consult a qualified expert for the latest laws and regulations.
