The government has recently extended the deadline for the submission of income tax returns for the financial year 2020-21 to 30 September. to include the ITR, disclose all available funds. But cryptocurrency investors are now unsure of how to invest in their ITR without a clear guideline to separate profits from tangible currencies.
After the Supreme Court lifted the RBI ban on cryptocurrencies, many Indians began investing in this speculative market to make a fuss during the Bitcoin, Dogecoin, and others bulls in the past. Some of them should be well paid, but how this salary can be disclosed now becomes a job for them.
In terms of section 2 (14) of the Income-Tax Act, 1961, the principal property is any type of property held by a person, whether it is not related to his or her business or occupation. Therefore, tax experts believe that profits from cryptocurrencies are also being charged.
If so, then these profits can be classified as capital gains or business income. This division will determine which tax return form should be included in the study and how much it will be charged on salary. Revenue from cryptocurrencies can also be highlighted under ‘Revenue from Other Sources’ during the introduction of ITR.
The calculation of the tax levied on cryptocurrencies will take into account the holding period. If investors hold cryptocurrencies for 36 months or more, profits can be charged as long-term earnings, and under 36 months, it could be a temporary benefit.
Short-term profits will be taxed according to the slab rates applicable to the taxpayer, but the long-term profit is taxed at 20 percent tax. For people with a major profit or business income from cryptocurrencies, ITR-2 and ITR-3 should be the appropriate forms to complete tax returns.
However, a lack of clarity on crypto tax can lead to disputes and it is best to consult your tax advisor before disclosing your crypto income to ITR forms.