Correct. It is more of a moral issue right now. If you want to report all your BTC income as regular income, you might want to pay tax on it.
But since RBI has no such guideline (how to calculate tax on Bitcoin income), you might just want to report only the amount you convert to fiat.
Having that said, it would be nice to have some guidelines from RBI or income tax department on how taxable BTC is and how much tax to pay.
I guess if you want to be totally accurate/honest, you have to calculate your BTC income based on the exchange rate on the day you receive BTCs.
You would then have capital gains/losses when you actually convert to fiat.