This is how you show your cryptocurrency investment while filing ITR!

It’s time to file your income tax return…Many taxpayers are preparing to file their tax return for the financial year 2022-23. Some important changes have been made in the return of assessment year 2023-24. And one of these changes is related to virtual digital assets including Bitcoin.

From April 1, 2022, special provisions have been made in the Income Tax Act to tax income related to Virtual Digital Asset (VDA) including crypto currency. Also, under section 194S, in certain cases the buyer will have to deduct TDS of 1% before making payment for crypto purchase. Schedule VDA has been added to the ITR form to disclose earnings from Virtual Digital Assets. Here, the taxpayer will have to give details of the income earned from crypto currency. Also, it will have to be told whether it is considered as business income or capital gain.

If you have earned any income from crypto currency in the financial year 2022-23, then keep the necessary information with you to avoid any problem while filing the return. Minute details have to be given like the date of sale, the income earned from selling, what kind of income, etc.

Taxpayers should check their Form 26AS and Annual Information Statement (AIS) to include the TDS deducted in case of Virtual Digital Assets in the Income Tax Return. If you have income from virtual digital asset along with your salary then you cannot fill ITR-1. Instead you will have to fill ITR-2. Income from the sale of virtual digital assets like crypto, Non-Fungible Token (NFT) is taxed at 30 per cent.

The second change is related to donation. If you have given a donation on which tax exemption can be taken under section 80G, then just the receipt will not work. A new column has been added in the income tax form. In this column, the donation reference number will have to be given for the donation made to the institution, where 50 percent deduction is allowed subject to the qualifying limit. The donation reference number should be mentioned in the Form 10BE or receipt issued by the organization receiving the donation.

The next change is for people in the stock market. A separate column named ‘Trading Account’ has been added in the ITR form in which people have to give separate information about their intraday trading activities. In this, you have to report the turnover of intraday trading and the earnings from intraday trading. This column has been added in ITR-3 form.

A new questionnaire has been added inside ITR-3 and ITR-4, which is for those with business income. In this questionnaire, the taxpayer will have to tell whether he has opted for the new tax regime under section 115BAC in the previous years or has come out of this regime. This will help the tax authorities to know whether someone has used the new tax regime in the past.

Individuals with business income can switch between tax regimes only once. That is, if they switch from the old tax system to the new tax system, then they will get the chance to go back to the old tax system only once. On the other hand salaried individuals can choose tax regime every year.

If you are also going to file income tax return, then, these changes can be useful for you. While filing returns, you have to take care of some other things as well. Like choosing the right ITR form on the basis of your income. Show the income under the correct header. After filling ITR, do not forget to verify it. Apart from salary, if there is any other income, then definitely report it in the return, otherwise trouble may arise for you.