Cryptocurrency in India has gained massive popularity over a few decades, but the Income Tax Department is now closely monitoring it. For non-disclosure or incorrect reporting of crypto income, many taxpayers are receiving notices from the tax department. If you have dealt in crypto during the year, please be careful while filing ITR in India.
In this article, we provided you with 3 common mistakes to avoid while filing ITR in India on Cryptocurrency.
How Crypto is Taxed:
- A flat 30% tax is levied on all profits made from all your profitable trades. You cannot offset your losses made on other transactions against this profit.
- And also your losses will not be carried forward to another financial year. It means, if you made profits in certain trades, you must pay 30% tax on those profits, even if you incurred losses on other trades.
Transactions are not reported in your ITR:
- On every trade 1% TDS is deducted on all crypto exchanges in India.
- These details are already available with the government through your AIS (Annual Information Statement).
- If you try and hide it and don’t even report it, they will also impose the penalty on you for non-disclosure.
Wrongly Classifying Income:
You can file the profits under capital gains or under business profits; it’s best to consult your tax advisor before filing, because this would depend on how much you have traded and with what frequency. For a professional tax advisor, reach out to us at enquire@kdpaccountants.com.
Conclusion:
Cryptocurrency in India is a new and evolving area, and many investors might find it difficult or confusing. But the rules are very clear, as we mentioned in this article. The safest approach is to stay transparent and file your ITR carefully.
At KDP Accountants, we believe the role of a tax advisor is not just about compliance, but giving you proper guidance on the fast-changing regulatory environment. Our team of professionals will guide you on correct reporting, ensuring proper compliance with the latest tax rules, foreign income status, or NRI taxation, and help you avoid penalties or notices from the department. For more information or expert guidance, reach us at enquire@kdpaccountants.com.
