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ITR Forms Have Separate Section For Crypto Income

The recently released 2023 ITR Forms have separate section for crypto income. This interesting change is seen in Income Tax Return Form 1 (ITR-1) and Income Tax Return Form 2 (ITR-2) so far. A separate schedule has been added for reporting income from crypto and other Virtual Digital Assets (VDA). 

Table of Contents

Schedule VDA - Income from transfer of Virtual Digital Assets / Crypto

The separate schedule for VDA requires details like date of acquisition, date of transfer, Head under which income to be taxed (Capital Gain), Cost of acquisition (in case of gift), Consideration received, and Income from transfer of Virtual Digital Assets and in case of loss you can enter the NIL value. It is to be filled in by a person who is in receipt of amounts or in other words by individuals who have sold any any crypto in previous year.

Be aware that Virtual Digital Assets shall comprise all the cryptos such as Bitcoin, Ethereum, etc, and other digital assets such as Non-fungible token (NFTs). 

This is how the Schedule VDA - Income from transfer of Virtual Digital Assets / Crypto looks like:

In India, income from cryptocurrency is considered taxable under the Income Tax Act, 1961. The tax treatment of cryptocurrency income in India depends on the nature of the income, i.e., whether it is considered as capital gains or business income.

If an individual buys and sells cryptocurrency as an investment, any gains or losses arising from the sale of cryptocurrency would be considered as capital gains. 

On the other hand, if an individual is engaged in the business of buying and selling cryptocurrency, the income earned from such activities is considered as business income, and will be taxed accordingly.

It is important to note that cryptocurrency income must be disclosed while filing income tax returns in India. Failure to disclose such income can attract penalties and prosecution under the Income Tax Act.

Taxation of Cryptocurrency or Virtual Digital Assets in India from Financial Year 2022-23

Effective from 1 April 2022 onwards, any income from transfer of VDAs/Cryptos will be taxable at the rate of 30% (plus surcharge and cess). The flat income tax rate is applicable to all investors, traders, or anyone transferring crypto assets in the previous financial year without any merit or distinction between short-term and long-term gains.  The 30% tax rate will be levied on ALL profits made from the transfer of virtual assets (sale of cryptocurrencies). The 30% crypto tax rate will be the same irrespective of the nature of income i.e. it does not matter if it is an investment income or business income and is irrespective of the holding period. 

The entire 30% tax on any crypto assets will be deducted from the profits earned via various crypto tokens in an entire financial year. Also NO deduction will be allowed any expenditure or allowance for cryptocurrency (other than the cost of acquisition). Further, the government has clarified that if one incurs any loss from the transfer of virtual assets, it cannot be set off against any other income.

So far this new section is seen on CBDT’s New ITR 1 and ITR 2 forms for AY 2023-24.

Income Tax Return Form 1 (ITR-1)

Income Tax Return Form 2 (ITR-2)

Income Tax Return Form 2 (ITR-2) is for individuals and HUF for their income other than income from business or profession. Individuals and NRI having income from salary, house property, capital gains and other sources can file ITR-2. Salaried individuals who have gains or losses from buying and selling shares should file ITR-2. 
So basically, ITR-2 is applicable for individuals and Hindu Undivided Families (HUFs) who have income from any of the following sources:
  1. Income from salary or pension
  2. Income from house property
  3. Income from capital gains
  4. Income from other sources (including lottery winnings)
  5. Foreign income or assets

In addition to the above, ITR-2 is also applicable for those individuals or HUFs who do not have income from business or profession.

Therefore, if you are an individual or HUF and have income from any of the above sources, you are eligible to file ITR-2 for the Assessment Year 2023-24.



If you made any income from crypto and other virtual digital assets in FY 2022-23 then you will have to report such income in a separate schedule. Tax provisions for taxation of VDAs was introduced from FY 2022-23 hence the addition of this schedule.

Crypto Investors, Traders and Taxpayers in general can start working to estimate tax liability and disclosure required in ITR forms. The timely release of income tax return forms also indicates that Income Tax Department expects taxpayers to do their filing soon after the financial year ends and NOT to expect extension beyond 31 July 2023.