DelhiDesk The Indian government has included taxation of cryptocurrencies or virtual digital assets in the Income Tax Act via the Finance Act of 2022. Taxpayers will report income from the sale of crypto assets in their income tax return forms for the first time. A separate Schedule VDA has been inserted in ITR-2 for reporting income from VDA. Losses from the sale of cryptocurrencies cannot be set off across different currencies, but clarification has been made that losses within the same currency can be set off. The tax rate for gains from VDAs is 30%, and the purchase cost of VDA is allowed to be deducted. If taxpayers do not report crypto transactions in the ITR, there is a high chance that the return will be processed with a tax due, and the return will be selected for scrutiny.

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👉 The Finance Act of 2022 has included taxation of cryptocurrencies or virtual digital assets (VDA) in the Income Tax Act.
👉 Taxpayers will be reporting income from sale of crypto assets in their income tax return (ITR) forms for the first time.
👉 A separate Schedule VDA has been inserted in ITR-2 for reporting Income from VDA.
👉 Losses cannot be set off, except within the same currency.
👉 Tax rate for gains from VDAs is 30% under section 115BBH.
👉 Taxpayers who have not included crypto income while paying advance tax might face penal interest.
👉 The income tax department sent an intimation via SMS and email to all taxpayers who have transacted in shares/securities, cryptocurrency and for cases where the tax deducted at Credit at source (TDS) was not sufficient to meet the tax liability for the income earned by such taxpayers.
👉 If crypto income is reported as business income, the taxpayer may need to comply with the existing tax audit provision and calculate turnover in the case of crypto derivatives.

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