PANews reported on December 17 that according to Decrypt, the Income Tax Appellate Tribunal (ITAT) in Jodhpur, India, ruled that profits from cryptocurrency sales should be considered capital gains before the implementation of the virtual digital asset system in 2022. The ruling classifies cryptocurrencies, including Bitcoin, as capital assets, resolving the previous ambiguity surrounding cryptocurrency taxation. The ITAT ruling ensures fair treatment under long-term capital gains laws and reduces the tax burden on early adopters.
The ruling stems from a case in which an individual purchased bitcoin worth $6,478 (Rs 5.05 lakh) in 2015-2016 and sold it for $788,063.84 (Rs 66.9 lakh) in 2020-21. The individual argued that the proceeds from the sale should be treated as long-term capital gains as the holding period exceeded three years. The assessing tax officer initially objected, arguing that cryptocurrencies lack intrinsic value and cannot be classified as property. Since the holding period exceeded three years, the tribunal ruled that the profits qualified as long-term capital gains and allowed the taxpayer to claim a deduction under the existing law. Rejecting the tax officer's argument, the ITAT held that cryptocurrencies constitute property rights under Section 2(14) of the Income Tax Act. The tribunal noted that "any kind of property held by a taxpayer," including rights or claims over assets, comes within the definition of capital assets.
