The relation of cryptoassets and the government of India is a bit ambiguous. Though the Union finance ministry and Reserve Bank of India actively discourage Indians to invest in crypto currency, arguing that it is a domain that lacks regulation, and therefore, involves extreme risks, the government collects taxes from gains made from crypto assets at the rate of 30%.
In fact, MoS Finance Pankaj Chaudhary has informed the Lok Sabha that the government has not decided on any timeline for introducing regulatory guidelines for the Virtual Digital Assets (VDA) industry.
Significance of IT Appellate Tribunal ruling
The significance of the direction by the Income Tax Appellate Tribunal is clear, said experts. It goes to lay down the ground that cryptocurrencies should be treated as capital assets. Also, if anyone makes a profits on sale of such assets before 2022, when the government laid down certain rules, should be considered as capital gains. Obviously, such gains should be taxed in accordance with that treatment. The Jodhpur bench of the tribunal delivered the verdict.
“It not only recognises Bitcoin as a capital asset but also provides clarity on how such transactions should be treated for the period before the introduction of the formal VDA (virtual digital asset) regime in 2022,” Sandeep Jhunjhunwala, tax partner (M&A) at Nangia Andersen was quoted in the media while explaining the significance of the ruling. The Centre’s current rules state that profits from the sale/transfer of any virtual digital assets after April 1, 2022 would attract 30% taxes and surcharge and cess.
The IT Appellate Tribunal’s logic
The ruling came after the tribunal heard a dispute when a person sold crypto assets, bought in 2015-16 with Rs 15.05 lakh, for Rs 76.69 crore in 2020-21. He argued that the dealings were made before the government defined virtual digital assets under the Income Tax Act. But the tribunal bench ruled that crypto currency was “an asset and therefore gain on sale of cryptocurrency has to be taxed under the head ‘capital gain’ and not under the head income from other sources’ before the lawmaker made the specific provision in the (Income Tax) Act”.
If you have made any profit from the sale of crypto assets even before 2022, it will be subject to capital gains tax, the Income Tax Appellate Tribunal has ruled. India is in no hurry to take an official stand on cryptocurrency, the Parliament has been told by the government. Biz News Business News – Personal Finance News, Share Market News, BSE/NSE News, Stock Exchange News Today
