The youth has been the most interested in investing in cryptocurrency in India. Some youth are seeing more profits than shares in cryptocurrency. They are withdrawing money from shares and investing in digital assets. They are confident that this will give them more profits. If you also purchase cryptocurrency, then it is important to know the tax rules on its profits.
ITR has to tell about the profits from Crypto
If you have earned profits from investing in Crypto in Financial Year 2024-25, then you have to tell about this in the incate tax return. If a taxpayer does not tell about the sale or profit of digital assets in his income tax return, then he can get the notice of the Income Tax Department. The department can initiate legal action against him along with imposing penalty on it.
Announcement of tax rules in the union budget of 2022
The government announced the tax rules on Digital Assets in Union Budget 2022. For this, crypto assets were considered as virtual digital assets. This means that if a taxpayer transfers virtual digital assets like Crypto or NFT, then he will have to pay tax at a flat 30 per cent rate on the income from it. If Crypto Assets are a store in your wallet and you have not told about this in ITR, then the Income Tax Department will consider it an unaccounted income under Section 69A.
If you forget to tell income, you can file revised returns
If you have not told about the income made from cryptocurrency in your ITR last year, then it would be good to file a reward return under section 139 (8A) before your deadline is over. It is important to keep in mind that if you have an income from cryptocurrency, then you cannot use ITR Form 1 of Income Tax. You have to use one of ITR 2, ITR 3 or ITR 4. It is also necessary to keep a complete account of the transaction for taxpayers investing in cryptocurrency. You have to keep the transaction history, wallet details, exchange reports and TDS details.
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35 percent tax will have to be paid not in total, not 30 percent
It is important to keep in mind that in addition to 30 per cent tax on profit from investment in crypto, other charges are also charged. For example, if you have earned a profit of Rs 1,000 by selling cryptocurrency, then after reducing 30 percent tax i.e. Rs 300, you will not get 700 rupees in your hands. You will also have to pay 4 percent cess and 1 percent TDS. The total tax rate reaches 35 percent when it is mixed.