Next year's ITR to have separate column for crypto income

Income tax return forms from next year will have a separate column for making disclosures on gains made from cryptocurrencies and paying taxes, Revenue Secretary Tarun Bajaj said on Wednesday.

The government will from April 1 charge a 30 per cent tax plus cess and surcharges, on such transactions in the same manner as it treats winnings from horse races or other speculative transactions.

In an interview with PTI, Bajaj said gains from cryptocurrencies were always taxable and what the Budget proposed is not a new tax but providing certainty over the issue.

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"Next year ITR form will show a separate column for crypto. Yes, you will have to disclose," he said.

"The provision in the Finance Bill is related to taxation of virtual digital assets. It is to bring certainty in taxation of cryptocurrencies. It does not convey anything on its legality which would come out once the Bill (on regulating such assets) is introduced in Parliament," he said.

The government is working on legislation to regulate cryptocurrencies, but no draft has yet been released publicly.

The 30 per cent plus applicable cesses and surcharge of 15 per cent on income above Rs 50 lakh will have to be paid on income from cryptocurrencies, he said adding the income tax return form from next year will have a separate column to declare gains from crypto.

"The Government was very clear that it has to push for a tax on income from crypto assets. So we have brought in maximum rate and levied 30 per cent, with an applicable surcharge. We have also brought in TDS, so we will now track the transactions," Bajaj said.

The Budget 2022-23 also proposed a 1 per cent TDS on payments towards virtual currencies beyond Rs 10,000 in a year and taxation of such gifts in the hands of the recipient. The threshold limit for TDS would be Rs 50,000 a year for specified persons, which include individuals/HUFs who are required to get their accounts audited under the I-T Act.

The provisions related to 1 per cent TDS will come into effect from July 1, 2022, while the gains will be taxed effective April 1.

Also, no deduction in respect of any expenditure or allowance shall be allowed while computing income from transactions in such assets. It has also specified that losses from the transfer of virtual digital assets will not be allowed to be set off against any other income.

No deduction has been allowed since cryptocurrencies and virtual digital assets do not have any economic value, except the underlying technology, Bajaj said.