Latest ITR forms have new section for cryptocurrency income: These details will be needed when filing

Feb 14, 2023

Synopsis
The new schedule for VDA requires details like date of acquisition, date of transfer head under which income to be taxed (capital Gain), cost of acquisition (in case of gift; a. enter the amount etc. to be filled in by a person who is in receipt of amounts) for transfer of VDA

There will be a separate schedule for reporting income from virtual digital assets (VDAs) such as cryptocurrency in the income tax return (ITR) forms for individuals for Assessment Year 2023-24 (Financial Year 2022-23). The Central Board of Direct Taxes (CBDT) notified ITR forms 1-6, ITR-V (verification form), and ITR acknowledgment form for AY 2023-24 through a notification dated February 10, 2023.

The new schedule for virtual digital assets in the ITR forms requires details such as date of acquisition, date of transfer head under which income is to be taxed (capital gains), cost of acquisition (in case of gift; a) Enter the amount on which tax is paid under section 56(2) if any, b) In any other case cost to previous owner), income from transfer of virtual digital assets (enter nil in case of loss) for transfer of virtual digital assets. So those earning income or gains from VDAs should now be prepared with all these details while filing ITR for Assessment Year 2023-24 or Financial Year 2022-23.

This separate schedule for virtual digital assets has been introduced in the income tax return forms as Budget 2022 proposed a new tax on income from virtual digital assets. Budget 2022 announced that any income from the transfer of any virtual digital asset is taxed at the rate of 30 per cent. No deduction in respect of any expenditure or allowance shall be allowed while computing such income, except the cost of acquisition, it added. Further, there will be a 1 per cent tax deducted at source (TDS) on any payment made in relation to the transfer of virtual digital assets. It was also proposed that the gifting of virtual digital assets will be taxed in the hands of the recipients.

Commenting on the introduction of new schedule for VDA in the ITR forms, Saraswathi Kasturirangan, Partner Deloitte India, said, "A separate “Schedule – VDA” has been added to report income from virtual digital asset such as crypto currency. Tax provisions for taxation of VDAs was introduced from FY 2022-23 hence the addition of new schedule is in line with the expectation.

Aarti Raote, Partner Deloitte India said, "The new ITR 1 and 2 forms notified by the CBDT are broadly similar to that of the previous year with some additional details required to be filed for VDA assets. There is a separate schedule for VDA that requires details like the date of acquisition, date of transfer head under which income to be taxed (capital gain), and cost of acquisition for transfer of VDA."

There are no major changes in the ITR forms notified for 2022-23 (AY 2023-24). However, the ITR forms have been notified almost two months earlier than usual. Commenting on how this will benefit the common taxpayers, Kasturirangan said, "ITR forms have been notified well in advance this year, a very welcome move and a step further towards ease of compliances. This will help taxpayers to be well prepared on the disclosures and reporting requirements in the tax return forms."

[The Economic TImes]