View: Cryptic tax rules for cryptos
Income tax returns (ITRs) were also modified accordingly, and the current tax filings will be the first instance when income from transfer of VDAs will be captured separately. This has thrown up various questions and left stakeholders looking for answers.
Previously income from transfer of VDAs could have been characterised as business income, capital gains or other income, depending upon facts and circumstances, however, from FY 2022-23 onwards, such income could be characterised as business income or capital gains only. While deductions and set off of losses are not allowed, thereby neutralising the distinction between the different classifications, interest on delay of payment of advance tax could still be an issue to watch out for.
The transactions pertaining to income from transfer of VDAs is required to be disclosed under the Schedule VDA in the ITR forms. As per literal interpretation of provisions under the ITA (Section 115BBH), the intent seems to levy tax on a transactional basis.
For eg. Sale of 0.5 BTC is one transfer and sale of 0.25 BTC is another transfer, and both are to be taxed separately.
However, if two transfers take place on the same date, can they both be clubbed and reported in Schedule VDA as the form suggests? Or when a VDA sale order is placed and it is sold in 7 different fractions, should each fraction be individually reported? What is the lowest value for it to qualify as a VDA for reporting? Further, unlike shares related disclosures, where name of each share is required to be specified, there is no similar disclosure requirement under Schedule VDA. Therefore, it is unclear whether taxpayers should club inter-coin trades (one BTC trade and one ETH trade) as well and disclose it on a daily
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