The Ministry of Corporate Affairs (MCA) recently mandated firms to disclose all cryptocurrencies or virtual currencies transactions via their balance sheets. Starting 1 April 2022, the government begins to tax gains earned via cryptocurrencies and non-fungible tokens. Until now, the IT department banked on voluntary disclosures concerning virtual digital assets (VDAs) transactions.
The tax authorities may soon inform crypto exchanges and banks to record transactions related to VDAs. Once this move is implemented, the Annual Information Statement (AIS) will reflect digital assets’ purchases and sales. AIS comprises details of a minimum of 46 financial transactions done by a taxpayer in a financial year. The Central Board of Direct Taxes (CBDT) plans to chalk out the taxation terms by the end of this month.
With this initiative, there will be lesser chances of revenue leakage. The details related to VDA-related transactions will be accessible to tax authorities on a real-time basis, and they will be examined without fail. When VDA transactions are part of AIS, there will be lesser chances of any mismatch in data. If there is a mismatch, a taxpayer can intimate the IT department. If the mismatch is not communicated, it could be assumed that the data in AIS is correct, and the tax officials may ask the taxpayer to explain it.
After the taxation rules are finalised, the IT department will decide whether to make it compulsory to report digital asset transactions as part of specified financial transactions (SFTs) provided by prescribed entities. Nevertheless, SFTs generally record transactions that exceed the threshold. They include the expenditure and investment of a taxpayer in a financial year.
For any clarifications/feedback on the topic, please contact the writer at email@example.com.
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.