Here’s What To Do If You Missed Entering Crypto Gains In ITR

From the current financial year, the government has introduced a special taxation regime for crypto assets or virtual digital assets (VDAs). Under this, gains from the sale of crypto assets are taxed at a uniform rate of 30%, irrespective of the tax slab, and without the benefits of offset and carry forward of losses.

For example, investors in equities can offset losses in one stock against another, carrying forward both short-term and long-term losses for eight assessment years. However, it does not apply in this case.

A new section, 194S has been inserted in the Income Tax (IT) Act for deduction of tax from payment of consideration for transfer of digital assets. In addition, 1% Tax at Source (TDS) will be deducted on transfer of such property in excess of a certain limit.

The lack of specific taxation norms for crypto assets in the last financial year has led some investors to believe that they do not have to pay tax on gains from VDAs. However, this is not the case.

Tax experts say that apart from the taxation norms, individuals also have to pay tax on gains from crypto assets for the previous financial years.

“For the previous year, the gains were treated as ordinary capital gains, as there was no special tax regime in the previous financial year for crypto assets. Hence, for reporting purposes in the ITR, as capital gains or business income. Profits were taxed in the U.S.,” said Naveen Wadhwa, Deputy General Manager, Taxman.

Also, in case of capital gains, individuals need not mention the source of profit. Therefore, profits from crypto were taxed in the same way as gold or art.

Individuals were allowed to set-off long-term or short-term losses from crypto assets along with other capital gains, subject to sections 70 and 71 of the Income Tax Act, as gains in the previous financial year.

“If a person forgets to file details of crypto gains in the ITR within the July 31 deadline, it will be treated as under-reporting or misreporting of income, and will attract a penalty of up to 200% of tax evasion. Individuals may also face prosecution,” Wadhwa said.

Tax experts suggest that individuals who have failed to report crypto profits should revise their returns immediately. People can visit the Income Tax Portal, where after logging into their account, they will get the option to file a revised return.

will be liable to the penalty of the taxpayer As per section 234F of the IT Act, if the delay in filing return is more than July 31, 5,000. If income does not exceed 5 lakh, then the fine is 1,000, which has to be mandatorily paid by the taxpayer before filing the revised ITR.

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