According to PANews, the Income Tax Appellate Tribunal (ITAT) in Jodhpur, India, has ruled that profits from the sale of cryptocurrencies should be considered capital gains, provided the transactions occurred before the implementation of the virtual digital asset regime in 2022. This decision categorizes cryptocurrencies, including Bitcoin, as capital assets, clarifying previous uncertainties surrounding cryptocurrency taxation. The ITAT's ruling ensures fair treatment under long-term capital gains laws, alleviating the tax burden for early adopters.
The ruling originated from a case involving an individual who purchased Bitcoin worth $6,478 (approximately 505,000 INR) during the 2015-2016 fiscal year and sold it for $788,063.84 (around 66.9 million INR) in the 2020-21 fiscal year. The individual argued that the profits should be treated as long-term capital gains due to a holding period exceeding three years. Initially, tax assessment officials opposed this view, claiming that cryptocurrencies lack intrinsic value and cannot be classified as property. However, the tribunal ruled that the profits qualify as long-term capital gains due to the extended holding period, allowing the taxpayer to apply for deductions under existing laws. The ITAT dismissed the tax officials' arguments, stating that under Section 2(14) of the Income Tax Act, cryptocurrencies constitute property rights. The court emphasized that any type of property held by a taxpayer, including rights or claims to assets, falls within the definition of capital assets.
