1โฃ Case Background:
๐น Raunaq Prakash Jain bought Bitcoin worth $6,478 (โน5.05 lakh) in 2015-16 and sold it for $78,8063.84 (โน6.69 crore) in 2020-21.
๐น He declared the profits as long-term capital gains and claimed a deduction under Section 54F for buying a house.
๐น Raunaq Prakash Jain bought Bitcoin worth $6,478 (โน5.05 lakh) in 2015-16 and sold it for $78,8063.84 (โน6.69 crore) in 2020-21.
๐น He declared the profits as long-term capital gains and claimed a deduction under Section 54F for buying a house.
2โฃ Tax Authority's View:
๐น The Income Tax Officer (AO) did not consider Bitcoin a capital asset under Section 2(14) because it wasnโt explicitly defined at that time.
๐น The AO taxed the gains as "Income from Other Sources", denying the long-term capital gain treatment and the Section 54F deduction.
๐น The Income Tax Officer (AO) did not consider Bitcoin a capital asset under Section 2(14) because it wasnโt explicitly defined at that time.
๐น The AO taxed the gains as "Income from Other Sources", denying the long-term capital gain treatment and the Section 54F deduction.
3โฃ Tribunal's Decision:
๐น The Income Tax Appellate Tribunal (ITAT) ruled in favor of the taxpayer.
๐น It held that Bitcoin qualifies as a capital asset, even before the Virtual Digital Asset (VDA) regime was introduced in 2022.
๐น Gains from the sale of Bitcoin should be taxed as long-term capital gains because:
โฆฟ Bitcoin represents a property or right under Section 2(14).
โฆฟ The holding period exceeded 36 months, qualifying for long-term gains.
๐น Deductions under Section 54F are valid.
๐น The Income Tax Appellate Tribunal (ITAT) ruled in favor of the taxpayer.
๐น It held that Bitcoin qualifies as a capital asset, even before the Virtual Digital Asset (VDA) regime was introduced in 2022.
๐น Gains from the sale of Bitcoin should be taxed as long-term capital gains because:
โฆฟ Bitcoin represents a property or right under Section 2(14).
โฆฟ The holding period exceeded 36 months, qualifying for long-term gains.
๐น Deductions under Section 54F are valid.
4โฃ Why It Matters:
๐น Before 2022, crypto taxation was unclear.
This ruling ensures fair tax treatment for long-term holders of Bitcoin/crypto.
๐น Pre-2022 gains can now be taxed as Capital Gains, not "Other Income."
๐น This landmark decision clarifies crypto tax treatment for the years before April 2022, when India introduced the 30% flat tax on VDAs.
๐น Before 2022, crypto taxation was unclear.
This ruling ensures fair tax treatment for long-term holders of Bitcoin/crypto.
๐น Pre-2022 gains can now be taxed as Capital Gains, not "Other Income."
๐น This landmark decision clarifies crypto tax treatment for the years before April 2022, when India introduced the 30% flat tax on VDAs.
Read the full ruling here: itatonline.org
Loading suggestions...