New ITR Forms for AY 2023-24: Tax on Crypto & Minor Changes for ITR filing

Until last year, ITR forms used to be notified around April of the relevant assessment year, and ITR filing used to start by May/ June. This year with an aim to start ITR filing by the first day of the assessment year itself ITR Forms for AY 2023-24 have been rolled out by the Central Board of Direct Taxes (CBDT) on 15th February 2023.

In order to ensure streamlining of ITR filing, no major changes have been made in terms of filing ITR forms as compared to last year. We can say a step further towards ease of compliance. For AY 2023-24 the CBDT has notified Income Tax Return forms (ITR 1-6) and Income Tax verification forms (ITR V).

New Schedule introduced for Crypto

The government has introduced a new schedule to the ITR forms for reporting income from cryptocurrency or NFTs and other virtual digital assets (VDA).

As announced in Budget 2022, it is imposed that, income from the transfer of a virtual digital asset is subject to a 30% tax. No deductions are allowed in terms of expenses or allowances.

Crypto Losses cannot be Set Off

Crypto traders’ worst nightmare has come to reality. The government has clarified that the losses from VDA/crypto cannot be carried forward or set off against any income.

Thus, Loss from the transfer of VDA/crypto cannot be set off against profit from the same or other virtual digital assets.

Reporting of Income from Crypto in ITR

Now coming to the point of reporting income from crypto and other virtual digital assets, a separate schedule (Schedule VDA) is provided in these new ITR forms, in which taxpayers have to fill in details such as the,

  • Date of Acquisition/ Purchase

  • Date of Transfer/ Sale

  • Head under which income to be taxed (Capital Gains/Business Income)

  • Cost of Acquisition/ Purchase

    In the case of a gift, If you received crypto/VDA as a gift, you must provide details of the cost of acquisition as follows:

    As per section 56(2)(x) of the Income Tax Act, If you’re receiving crypto as a gift greater than the value of INR 50,000 from a non-relative then the entire amount is taxable.

    a) Enter the amount on which tax is paid under section 56(2)(x) if any - It means, let’s say if you have received bitcoins as a gift worth ₹60,000 from your friends, then in such a case, the entire amount shall be taxable as IFOS.

    If a taxpayer has received cryptocurrency as a gift either of value below ₹50,000 or of value more than ₹50,000 from a relative as per the IT act. And the below point is applicable under schedule VDA.

    b) In any other cases cost to the previous owner has to be entered.

  • Sales Consideration received

  • Income from transfer of virtual digital assets (enter nil in case of loss).

Let’s understand with an Example:

An individual Hitesh aged 28 years has a taxable salary income of ₹8 lakhs and is also involved in crypto trading. He had made some transactions from Crypto Exchange as mentioned below.

What would be his tax liability for AY 2023-24 under the old tax regime?

Schedule VDA - Income from transfer of virtual digital asset

Solution: Following is the total taxable income of Hitesh for FY 2022-23 (AY 2023-24).

Income from salary - ₹8,00,000

Income from capital gain (Crypto) - ₹3,75,000

Tax Liability at Slab Rate - ₹72,500 (₹12,500+₹60,000)

Tax Liability at Special Rate - ₹1,12,500 (30% of ₹3,75,000)

1% TDS

Now from this FY 2022-23, while filing ITR, the TDS deducted shall be reported under the tax credits as at the time of the transfer of virtual digital assets TDS would have been deducted at 1% under section 194S if the aggregate amount exceeds the specified limits.

No Common ITR Form

There’s no announcement made related to the common ITR Forms proposed in budget 2023, It is assumed that the implications of common ITR Forms will be from FY 2023-24 & AY 2024-25.