Next year’s IT returns will have a separate column for crypto earnings: Revenue Secretary

The government will levy 30 per cent tax and cess and surcharge on such transactions from April 1, the way it treats winnings from horse racing or other speculative transactions.

In an interview with PTI, Bajaj said that gains from cryptocurrencies are always taxable and what has been proposed in the budget is not a new tax but provides certainty on the issue.

“The provision in the Finance Bill pertains to the taxation of virtual digital assets. This is to bring certainty in the taxation of cryptocurrencies. It does not state anything on its legality after it has been introduced in the bill (on regulating such assets). Will come to the fore. Parliament,” he said.

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

Meanwhile, a central bank-backed digital currency will begin to circulate in the next fiscal year to introduce cheaper, more efficient currency management.

Applicable cess in excess of 30 percent and surcharge of 15 percent on income above 50 lakh will have to be paid on income from cryptocurrencies, he added, adding that from next year there will be a separate column for declaring profits from crypto when income tax return forms are added.

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

Finance Minister Nirmala Sitharaman in her budget speech on Tuesday announced the launch of ‘Digital Rupee’ by RBI as well as 30 per cent tax on profits from digital asset transactions, including cryptocurrencies and non-fungible tokens (NFTs). , as the country keeps pace with the global move towards virtual financial instruments.

“The government was very clear that it has to tax income from crypto assets. So we have brought the maximum rate and levied 30 per cent along with applicable surcharge. We have also brought in TDS, so now we will track the transactions,” Bajaj said.

Budget 2022-23 also proposes 1 percent TDS on payment of virtual currencies 10,000 in a year and taxation of such gifts in the hands of the recipient. TDS limit will be 50,000 per annum for specified persons, including individuals/HUFs who are required to get their accounts audited under the IT Act.

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

Further, 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 loss arising out of transfer of virtual digital assets shall not be allowed to be set-off against any other income.

Bajaj said that cryptocurrencies and virtual digital assets have no economic value, except for the underlying technology, with no deduction allowed.

According to an October report by industry research firm Chainalysis, the crypto market in India grew by 641 percent as of June 2021.

“It was always taxable, I am not saying it is not a new tax, I am bringing certainty in tax. Now if you show the crypto in the ITR form, you will have separate head crypto and it will be 30 per cent from you. percentage tax,” he said, adding that the message behind the budget announcement is that crypto is taxable.

Bajaj said gains from crypto are currently also chargeable to income tax, adding the Assessing Officer would assess ITR on the basis of crypto income which the assessee has shown.

“If someone says it is a Long Term Capital Gains Tax (LTCG), he can say that no, it is not LTCG tax, it is a business income and hence liable to 30 per cent tax,” he said.

With regard to taxability of cryptocurrency before April 1, 2022, Bajaj said, “For transactions before April 1, you will show certain heads in your ITR and the Assessing Officer will make an assessment for you”.

Giving examples, he said that at present trading in derivatives is not treated as investment or capital gain, but as business income.

“The Assessing Officer will consider which top crypto advantage should be charged,” the secretary said.

Bajaj said that the new currency that RBI will bring will also have underlying blockchain technology.

“So, we are also saying that since it has no economic value, we will not allow loss adjustments or reduction of losses.”

Bajaj said that currently some people are showing crypto profits as income and paying taxes, but some people are not doing so. With TDS provision in place, the transaction information will reach the tax department automatically.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.