Here's something that catches a lot of crypto traders off guard: the Income Tax Department already knows about your trades. Not all of them, maybe — but a lot more than you think. The mechanism? Your Annual Information Statement, or AIS.
If you've been hoping to just... not report your crypto gains, the AIS has made that a very risky strategy. Let me explain how this works and what you should do about it.
What Is the AIS (Annual Information Statement)?
The AIS is essentially the IT Department's dossier on your financial life. Launched in 2021, it replaced the old 26AS form as the comprehensive record of your financial transactions. You can access it by logging into the income tax portal at incometax.gov.in and navigating to AIS under the "Services" tab.
Your AIS pulls data from multiple sources — banks, mutual fund houses, brokerages, and yes, crypto exchanges. It shows:
- Salary income reported by your employer
- Interest earned on savings accounts and FDs
- Mutual fund and stock transactions
- Property purchases and sales
- And now — crypto/VDA transactions
How Crypto Exchanges Report to the IT Department
Indian crypto exchanges are required to report transaction data to the IT Department. Here's what they typically share:
- Total buy value: The aggregate amount you spent buying crypto during the financial year
- Total sell value: The aggregate amount you received from selling crypto
- TDS deducted: Under Section 194S, exchanges deduct 1% TDS on the sell side (above the ₹50,000/₹10,000 threshold)
- Your PAN: Every KYC'd account is linked to your PAN, so the data maps directly to your tax profile
Exchanges like WazirX, CoinDCX, and CoinSwitch report this data. The IT Department uses it to pre-populate your AIS. So when you log in and check, you might see entries like "Sale of Virtual Digital Asset — ₹3,45,000" or "TDS u/s 194S — ₹3,450".
What About International Exchanges?
Here's where it gets interesting. Binance, Bybit, and other international exchanges may not directly report to Indian tax authorities. But don't assume that means your trades are invisible. The government has been tightening international information exchange agreements, and there's active push to bring foreign crypto platforms under reporting requirements.
Plus, when you transfer funds to or from an international exchange (via bank transfer or UPI), your bank reports that. Large outflows to known crypto-related entities can trigger questions.
What Exactly Appears in Your AIS for Crypto
Let me be specific about what you'll see. Under the "SFT Information" or "Specified Financial Transactions" section of your AIS, crypto data typically shows up as:
- Type: Purchase/Sale of Virtual Digital Asset
- Reported by: The exchange name (e.g., Zanmai Labs for WazirX)
- Amount: The aggregate buy or sell value in INR
- TDS amount: How much TDS was deducted under 194S
What it does not show: individual trades, specific coins, your profit or loss, or your cost basis. The AIS only has aggregate numbers. This is actually a key point — the IT Department sees totals, not details.
What Happens When Your AIS Doesn't Match Your ITR
This is where people get into trouble. The IT Department's systems now automatically cross-check AIS data against filed returns. If there's a mismatch, you could face:
- Intimation under Section 143(1): An automated notice pointing out the discrepancy and asking you to explain or pay the difference.
- Defective return notice: If you didn't report crypto income at all but the AIS shows VDA transactions.
- Scrutiny assessment: In more serious cases, a detailed examination of your return.
I've seen traders get a 143(1) intimation because their AIS showed ₹8,00,000 in crypto sales but their ITR reported ₹0 in VDA income. The IT Department doesn't care that you might have had losses — if you don't report the transactions, they assume the full sale value is income.
Even if you had net losses, you still need to report your VDA transactions in your ITR. Schedule VDA requires you to list your sale consideration and cost of acquisition for each VDA. A nil or loss return for VDA is far better than no VDA disclosure at all.
How to Check Your AIS for Crypto Data
Before filing your ITR, always cross-check your AIS. Here's the process:
- Log in to incometax.gov.in
- Go to Services > Annual Information Statement (AIS)
- Download the AIS for the relevant financial year
- Search for "Virtual Digital Asset" or scroll to the SFT section
- Note down the reported buy value, sell value, and TDS
If you see data that's wrong — say, an exchange reported ₹5,00,000 in sales but you know you only sold ₹3,00,000 — you can submit feedback on the AIS portal to flag the discrepancy. The exchange will need to correct their reporting.
How CryptoITR Helps You Match
Here's the practical part. CryptoITR calculates your tax from the same raw trade data that exchanges use to generate their reports to the IT Department. When you upload your WazirX or CoinDCX CSV, we're working with the same source of truth.
Your CryptoITR report gives you:
- Total buy value and total sell value for the financial year — these should closely match what appears in your AIS
- Per-asset breakdown for Schedule VDA in your ITR
- TDS summary that you can cross-check against your AIS and claim credit for in your return
If there's a small difference between your CryptoITR totals and the AIS figures (say, ₹500-1,000), it's usually due to rounding or timestamp differences at midnight on March 31. This is normal and generally not an issue. But if the difference is large, it's worth investigating before you file.
TDS Credit: Don't Leave Money on the Table
One more thing — if exchanges deducted TDS on your trades, make sure you're claiming that credit in your ITR. The TDS under Section 194S shows up in both your AIS and Form 26AS. When filing, map this TDS to your VDA income in the TDS schedule.
Say WazirX deducted ₹4,200 in TDS across the year. If your total VDA tax liability is ₹15,000, you only owe ₹10,800 after TDS credit. If you forgot to claim it, you've effectively paid ₹4,200 extra. Every rupee counts.
The bottom line: your AIS is not something to be afraid of — it's actually a useful cross-check. Download it, compare it to your CryptoITR report, and make sure everything lines up before you hit "Submit" on your return.