Traders in dilemma over disclosing cryptocurrency as foreign asset

economictimes.indiatimes.com:

cryptocurrency traders who have moved their virtual digital assets (VDAs) to wallets of offshore exchanges like Binance face a dilemma as they fill their Income tax return (ITR) forms in which for the first time VDAs find a mention. They are unsure whether to disclose their ‘overseas’ crypto holdings. Does transferring the coins from a wallet in an Indian exchange to a digital purse offered by an overseas exchange makes the VDAs a ‘foreign asset’ in the eyes of the Income tax (I-T) authorities? If it does, then hiding the information would be a gross violation. However, if they disclose the VDAs (transferred through the blockchain network) as ‘foreign assets’, it may be later construed as a breach of the Foreign Exchange management Act (FEMA). Simply because moving cryptos originally purchased in India to a wallet abroad can be interpreted as cross-border flow of currency in the garb of VDAs. And, reporting of any foreign asset without any matching remittance of currency through the banking channels could be questioned later. No clear answers

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Today no one knows whether cryptos from an Indian exchange to a foreign wallet is a kosher transaction under the stringent foreign exchange regulations. “Whether cryptocurrencies are assets at all, and if these are, are the cryptos in India or outside…these are burning questions without clear answers. However, reporting of foreign assets in the tax return form is to