Economy

Government Intends to Bring Cryptocurrencies Under Tax Law

The government intends to amend Section 26A of the Income Tax Act and the Annual Information Regulation (AIR), which reflects data related to all taxpayer-related investments and is often known as a ‘tax passbook’. An Indian who trades or invests in cryptocurrencies via Indian platforms might come under the tax law. There has been a suggestion to include words such as crypto assets, digital currency, and cryptocurrency in a few parts of the Income Tax Act. As a taxpayer filing tax returns, you will need to disclose your income via cryptocurrency trading or investment specifically.

AIR handles disclosures of investments worth Rs 2 lakh and more in mutual funds, jewellery, fixed deposits and recurring deposits. There is fear as the tax department cannot legally ask banks to disclose cryptocurrency transactions initiated by customers since the asset is not defined under the Income Tax Act.

After such an amendment is done, the tax department will obtain the transaction details of individuals via banking channels. The government is keen on amending the foreign asset disclosure norms so that an Indian will need to declare if they are holding cryptocurrencies overseas. As per the current regulations, Indians must reveal all the assets they possess or their income during the year via foreign trusts or real estate.

After the amendment, taxpayers who do not disclose their crypto investments or transactions might face punitive action. Banks will need to disclose data regarding crypto transactions with the tax department following the amendment.

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in

Share

Recent Posts

Mutual Funds: SIP Inflows Breach Rs 19,000-Crore Mark for the First Time in February ’24

The systematic investment plan (SIP) contribution in February 2024 has crossed a new milestone. The monthly contribution tipped at Rs…

9 months ago

Income-Tax Return: A Brief Note on Annual Information Statement (AIS)

The Income-Tax (I-T) Department has directed taxpayers to access the Annual Information Statement (AIS) via the e-filing official portal and…

9 months ago

Mutual Funds: All About SIP and Market Fluctuations

Considering the vagaries of the stock market, investors often ponder over reevaluating their strategies. Whether to continue to remain invested…

9 months ago

Income-Tax Saving Through Strategic Life Insurance Planning

Financial planning is beyond just investing wisely to save on taxes; it's also related to protecting oneself and one's loved…

9 months ago

Income-Tax Return: Here’s a Note on Tax-Saving Avenues

A salaried individual earning up to Rs 5-15 lakh as net salary on an annual basis must first take stock…

9 months ago

A Quick Take on Equity-Linked Savings Scheme

Equity-linked savings schemes (ELSS), also referred to as tax-saving schemes, are equity funds that invest a significant portion of their…

9 months ago