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HomeBusinessGovernment is considering bringing cryptocurrencies under Income Tax Act, information about income...

Government is considering bringing cryptocurrencies under Income Tax Act, information about income from investment will have to be given

Those in the country who are trading or investing in cryptocurrencies on Indian platforms, or who hold such coins outside the country, can come under the watch of the tax department. The government is considering amending the existing income tax and disclosure rules to include words like cryptocurrency in the upcoming budget.

The government is considering amending the existing income tax and disclosure rules to include words like cryptocurrency in the upcoming budget.

Those in the country who are trading or investing in cryptocurrencies on Indian platforms, or who hold such coins outside the country, can come under the watch of the tax department. The government is considering amending the existing income tax and disclosure rules to include words like cryptocurrency in the upcoming budget. According to the Economic Times report, the government wants to track the income and investment of cryptocurrencies inside and outside India. ET has been told by people with knowledge of the matter.

The government is contemplating to amend section 26A of the Income Tax Act. Along with this, changes are also being considered in the Annual Information Regulation (AIR), which shows data on all investors held by the taxpayer and is often called the tax passbook.

Income to be disclosed while filing ITR

According to the report, one person said that some parts of the Income Tax Act suggest adding words like cryptocurrency, crypto assets or digital currency. He said that this means that those who are filing income tax returns will have to disclose their income from investing or trading in cryptocurrencies. In AIR, any investment of Rs 2 lakh or more in fixed deposits, mutual funds, recurring deposits and jewelery has to be mentioned.

There are fears that the tax department may not ask banks to disclose cryptocurrency transactions done by customers legally. Because asset is not defined under Income Tax Act.

Foreign asset disclosure rules will also change

Once such a change is made, the tax department can ask for details of the transactions carried out by the individual through banking channels. In most cases, Indians are using them to deposit money earned through investing or trading in cryptocurrencies. The government is also considering revising the foreign asset disclosure rules to allow Indians to declare whether they hold cryptocurrencies abroad.

Under the existing rules, it is mandatory for Indians to disclose all assets they hold or income earned through real estate or foreign trusts during the year. These two changes in the existing tax rules are different from the cryptocurrency framework ready to be introduced by the government.

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Shehnaz Ali
Shehnaz is a Corporate Communications Expert by profession and writer by Passion. She has experience of many years in the same. Her educational background in Mass communication has given her a broad base from which to approach many topics. She enjoys writing about Public relations, Corporate communications, travel, entrepreneurship, insurance, and finance among others.
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