The government has introduced a separate section in the income tax return (ITR) forms for reporting income from cryptos and other virtual digital assets (VDA).
For the assessment year 2023-24, individuals must report income from such sources on ITR forms 1-6, ITR-V (verification form), and ITR acknowledgment form as notified by the Central Board of Direct Taxes (CBDT) on February 10, 2023.
The rules come after the government announced a new tax on VDAs in Budget 2022. Individuals must file details like acquisition date, transfer date, etc., under which income to be taxed, and acquisition cost in case of a gift and the person is in receipt of amounts for transfer of VDA.
Saraswathi Kasturirangan, Partner at Deloitte India, said: “ITR forms have been notified well in advance this year, a welcome move and a step further towards ease of compliance. This will help taxpayers to be well-prepared for disclosures and reporting requirements in the tax return forms.”
Kasturirangan said, "while the CBDT released a common ITR form for public consultation in November 2022, the new forms notified are separate ITR forms, and one would need to wait for common ITR forms.”
She said no significant changes were made to the ITR forms notified this year, except a separate schedule for VDA has been added to report income from such sources.
“Tax provisions for taxation of VDAs were introduced from FY2022-23; hence the addition of new schedule is in line with the expectation,” she added.
As per Budget 2022, any income from the transfer of VDA will attract a tax rate of 30 per cent. In addition, no deduction is allowed regarding any expense or allowance while computing such income, except for acquisition cost.
Additional Details On VDA
CBDT’s new ITR 1 and 2 forms will require individuals to furnish additional details like the acquisition date and transfer date for VDA assets for tax purposes.
In the case of a gift, the individual must enter the amount, etc., if the person receives amounts for transfer of VDA. There are also minor tweaks in the general info and TCS sections, said Aarti Raote, Partner Deloitte India.
In November 2022, CBDT circulated a draft version of the 'Common ITR form' where all ITR forms from ITR 1 to ITR 6 were proposed to be merged, Raote said, adding that it was aimed at providing taxpayers the ease of filing and reducing the time for filing tax returns.
“Taxpayers filing ITRs 1 to ITR 4 were to have the option to file individual tax forms or the common ITR form as per their choice. However, this form is not yet released by the CBDT, and one needs to wait and see if the CBDT would issue this common ITR subsequently,” Raote added.