Have you declared your crypto assets on your tax return this year? If not, the tax return must be revised. The deadline for filing ITR was July 31, and according to government figures, more than 58.3 million returns had been filed by the time the deadline expired that day.
With the current fiscal year, the government has instituted a separate taxation framework for crypto assets, often known as virtual digital assets (VDAs). Profits from the sale of crypto assets are taxed at a fixed rate of 30%, regardless of tax bracket, and without the benefits of offset and loss carry forward.
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For example, stock investors can carry forward both short-term and long-term losses for eight assessment years while offsetting losses in one stock against another. That, however, is not the case in this instance.
In the Income-tax (I-T) Act, a new section, 194S, has been included to allow for the deduction of tax from the payment of consideration for the transfer of digital assets. Furthermore, a 1% tax deducted at source (TDS) will be levied on the transfer of such assets beyond a particular threshold.
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Because there were no defined taxation rules for crypto assets in the previous fiscal year, several investors assumed they didn’t have to pay taxes on VDA gains. That, however, is not the case.
Furthermore, in the event of capital gains, people are exempt from disclosing the source of the gains. As a result, cryptocurrency earnings were taxed similarly to gold or art gains.
Individuals were able to set-off long-term or short-term losses from crypto assets with other capital gains in the previous fiscal year, subject to Sections 70 and 71 of the Income-tax Act.
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According to Section 234F of the I-T legislation, taxpayers would be subject to a Rs 5,000 penalty if they fail to file their returns by July 31. If the taxpayer’s income does not exceed 5 lakh, the penalty is Rs 1,000, which must be paid before filing the updated ITR.
