Indian Tax Payers: Conditions for Reporting Cryptocurrency Investments while Filing ITR

It is essential to report cryptocurrency investments while filing ITR in the financial year

Indian taxpayers must be careful with filing ITR after investing in the cryptocurrency market. Cryptocurrency investment must be reported while filing ITR within due date. The Government of India is still yet to clarify the legal issues and regulations of cryptocurrencies in India. Thus, multiple crypto investors are in doubt whether they will be reporting cryptocurrency investment in ITR. Let's get to know about the conditions for reporting cryptocurrency investment while filing ITR for taxpayers.

Earning profit from cryptocurrencies in digital wallets is considered to be income on such high amounts of dealings. These profits are subjected to tax and should be reported while filing ITR. Taxpayers should report all kinds of transactions that happened in multiple cryptocurrency investments as a business income or capital gains. According to the business income from the cryptocurrency investment, CG schedule of the ITR-3 form should be filed, whereas, for the capital gain, it is the ITR-2 form.

If the cryptocurrencies are held for over two years, the capital gain will be considered as long-term capital gains from cryptocurrency investments with tax at 20% and applicable surcharge and cess. Meanwhile, if it is a short-term capital gain, the tax will be subjected to the applicable personal taxation rates.

If any taxpayer incurs a massive loss in the cryptocurrency market, the return of income is needed to be filed within the due date of the financial year. One cannot avoid reporting this loss in cryptocurrency investment in ITR. If the net taxable income of a taxpayer as well as crypto investor exceeds Rs.50 lakh, the taxpayer needs to fill in schedule AL of the ITR form.

Thus, if any taxpayer fails to report any cryptocurrency investment in ITR forms, one must be ready to face some serious consequences in the nearby future. It is recommended to all taxpayers who are crypto investors that one must ensure to disclose all transactions, incomes, losses, and more while paying the right amount of taxes.