Report crypto income accurately to avoid  mismatch during verification

Every year some changes made to the income-tax-return (ITR) forms. Taxpayers need to be cognizant of them before they start the process of filling their returns.

Income from VDAs

The tax authorities have introduced a separate “schedule VDA” in the new ITR forms 2,3,5,6 and 7, respectively, for reporting income from virtual digital assets (VDAs), which include crypto currencies and non-fungible tokens (NFTs).

Taxpayers are required to disclose the details of each VDA transaction, including the sale and purchase dates. The purpose is to make it easier for the tax authorities to see if tax has been paid on VDA-related activities.

“Taxpayers must not skip any of these details, particularly since VDA exchanges and other similar entities in India may also provide inputs to the department as part of their reporting requirements. Any mismatches in declarations can lead to tax liabilities for taxpayers.”

Provide donation reference number

Taxpayers must disclose the application reference number (ARN) for donations eligible for Section 80G deductions. “To ensure compliance, taxpayers must obtain the ARN from the donation certificate issued by the done institution using Form 10BE. The ARN should be included in the ITR for accurate reporting of eligible deductions”

The ARN is a unique reference number that is mentioned in Form 10BE, the donation certificate, or donation claimed for Section 80G deductions. It curbs bogus donations that were used to defraud the exchequer.”

Income from intraday trading

The reporting requirements for intraday trading have changed. “Now, the profit or loss from intraday trading shall be considered business income rather than income from capital gains.”

The new ITR forms features a dedicated section on ‘trading account’ for reporting intraday trading operations. Here, details of turnover and income transferred to the profit and Loss account have to be provided.

“Maintain through records, consult a tax professional if needed, and stay updated with the regulations to ensure proper compliance with the reporting guidelines.”

Income from retirement benefits accounts

The ITR forms have been updated to include new disclosure requirements: income from retirement benefits accounts. Taxpayers must now disclose any taxable income on which relief under Section 89A of the Income –Tax (I-T) Act was claimed in previous years. The Fiancé Act, 2021, had inserted a new Section 89A in the I-T act , 1961, to provide  relief to residents who have income from foreign retirements benefits accounts.” Income from retirement benefit accounts is a dedicated section in the ITR forms that mandates taxpayers to disclose income derived from pension funds, annuities, or other retirement benefits schemes.”

The disclosure requirements also extends to taxable income on which relief was claimed under Section 89A of The I-T Act in earlier years, “Section 89A provides relief to individuals who have received arrears or additional income in a specific financial year, ensuring accurate calculation of tax liability. “For instance, let’s consider the case of Kumar, a taxpayer who received income from a pension fund and claimed relief under Section 89A in a previous year. In the current financial   year, Kumar earned Rs 5 lakh from his pension fund. During the previous year, he received arrears amounting to Rs 2 lakh.

When filing his ITR in the updated form, Kumar must disclose the Rs 5 lakh income from pension fund. Additionally, he must provide information about the Rs 2 Lakh arrear that was subject to relief under Section 89 A in the appropriate, he must provide information about the Rs 2 lakh aurorally, he must provide information about the Rs 2 Lakh arrear that was subject to relief under Section 89 A in the appropriate, he must provide information about the Rs 2 lakh arrear that was subject to relief under Section 89A in the appropriate disclosure section. Finally, “Taxpayers must pay attention to changes in residency status, especially if they have become non-residents. When filing your ITR, accurately disclose both of income from retirement benefits withdrawal and the taxable income resulting from relief claimed under Section 89A.”

HOW TO ENSURE ACCURACY IN REPORTING VDA INCOME

When filing tax return in the amended ITR forms, disclose income from virtual digital assets accurately

Indicate whether the income should be categorised as business income or capital gains and report it under the relevant head of income

To ensure accurate reporting, check Form 26AS which is a tax credit statement

Also check annual information statement, which provides information on tax deducted at source (TDS) under Section 194S

Verify that the income from VDAs, subject to TDS, has been properly included in the I-T return.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 9868944340